Preamble

The House met at Eleven o'clock

PRAYERS

[MR. SPEAKER in the Chair]

STORE, LIVERPOOL (FIRE)

Mr. Tilney: (by Private Notice)asked the Joint Under-Secretary of State for the Home Department whether he will make a statement concerning the fire which occurred in Henderson's store, Liverpool, on 22nd June, in which many people lost their lives.

The Joint Under-Secretary of State for the Home Department (Mr. David Renton): The Liverpool Fire Brigade was called at about 2.20 p.m. on Wednesday to a fire which had broken out in the building. The fire was under control by 5.50 p.m. According to the latest information, 11 persons were killed, one through falling from a ledge of the building outside and the others inside the building. Preliminary reports indicate that the fire brigade tackled the fire promptly and efficiently.
I should like to express my sympathy with the relatives of those who lost their lives, and to pay tribute to the courage shown by members of the Fire Brigade and the public.

Mr. Tilney: I should like to add my sympathy and that of my constituents to that expressed by my hon. and learned Friend the Joint Under-Secretary of State. I know that if other Merseyside Members on both sides of the House were able to be here they would also add their sympathy in respect of this terrible fire.
May I ask my hon. and learned Friend whether he will order an inquiry to be made into the various reported difficulties met by the fire services and, if so, whether that inquiry will cover the provision of fire escapes, the construction of staircases, the knowledge of fire orders and the frequency of fire drill among staffs?
May I also ask my hon. and learned Friend whether he will endeavour to ensure that the lessons of this tragedy are applied to other stores in the United Kingdom?

Mr. Renton: My right hon. Friend the Home Secretary has instructed Her Majesty's Chief Inspector of Fire Services to carry out an investigation on the spot, and the Chief Inspector has already gone to Liverpool.
The inquest opens today. Before my right hon. Friend decides upon holding a statutory inquiry, he must await the report from the Chief Inspector and the result of the inquest. I have no doubt, however, that the matters to which my hon. Friend referred will be borne in mind by the Chief Inspector when he makes his report to my right hon. Friend.

INDUSTRIAL SHARES (WIDER OWNERSHIP)

11.8 a.m.

Mr. R. Gresham Cooke: I beg to move,
That this House, believing that economic stability, political freedom, and social justice require a wider spread in the personal ownership of the industrial wealth of the country, calls upon Her Majesty's Government to consider whether any action can be taken to remove obstacles which may deter the small saver from investing in industry and to encourage him to make such investments.
I am delighted to have the opportunity of moving this Motion, first, because in five-and-a-half years of Parliamentary life this is the first time that I have won the Ballot for Motions, and, as a regular balloter, I find that the odds against being successful are about on a par with those of Premium Bonds; and, secondly, I have always been interested in making a bridge between employers and employees in industry and of doing something helpful in industrial relations. That has been a matter dear to my heart. Thirdly, I think that the Motions which we discuss on Fridays give us an opportunity to discuss wider questions not always on party lines and we can throw up ideas and perhaps give ourselves more food for thought for the future.
Anyone of the West, in looking at the West, cannot, I think, be satisfied with our industrial civilisation as it is at the moment. Have we got the answer to Communism? Can we stem the progress of Communism all over the world? Can we stop the march of Communistic ideas? Have we a general philosophy better than that of the Communists? It is no use being negative about this matter; that is a hopeless approach. So I hope to show today that we are discussing a vital idea which is not only superior to Communism, but more attractive. It is that the worker of the West should become not a wage slave, but an owner.
If I may take the points of the Motion in order, I wish, first, to refer to economic stability. As governors of the nation—I refer to all hon. Members, because we all to some extent share in the government of the nation—one of our duties surely must be to keep inflation in check.

We ought to be able to say to the people of this nation that the £ in 1970 will have substantially the same value as in 1960, a task which is almost beyond most Governments of the world. We should also be able to say that we hope to keep a good measure of full employment and we should be able to say that we expect to see a substantial growth in capital investment in this country.
Anyone who has looked at the World Economic Survey for 1959 must have been shocked and surprised, as I was, to find that the rate of capital growth in the West in the 1950s is no better than in the 1920s. We find, also, that Britain is not in the top ten industrial nations in the scale of capital growth. One of the means of overcoming this is to revive in this country a sense of thrift almost on the Victorian model which would blow away the idea that saving is worthless, that money is worthless; an idea engendered by high taxation and by inflation.
We must not only solve the problem of capital growth at home, but also overseas. We have a duty to the rest of the world in this respect. In the last century we were the entrepreneurs of the world. We went to the Argentine, to Egypt, to India and to France, even to France. We built the railways of the world by our own efforts and capital. Today, both private enterprise and Government in partnership have a duty to do what they can for the backward countries. The Kariba Dam is a glorious example in Africa of mixed enterprise. I think that one of the solutions to preventing black labour from flowing rapidly into South Africa would be the development of Basutoland and the High Commission Territories. Where is the capital? We must enlist the man-in-the-street, who is now, I claim, a prosperous man.
Turning to political freedom, I cannot claim that political freedom is guaranteed by economic freedom, but it certainly is assisted. As Burke said:
The power of perpetuating property in our families is one of the most valuable and interesting circumstances belonging to it and that which tends most to the perpetuation of society itself.
Those are noble words. Economic and political freedom is not assisted by the centralised control of Communism. Nor, frankly, do I think that it is assisted by


Socialism, because ownership by the State of the means of production and exchange is too remote, too far from the possession of the man-in-the-street.
I lived in Yorkshire in a mining area in the days before the nationalisation of the coal mines. I remember hearing, one evening, about a week before nationalisation, a miner say to his mate, when he saw the manager driving home in his motor car, "Eh, George, next week, thee and me will be driving in that motor car."
That was the popular idea of nationalisation, that things would actually belong to the people. Of course, matters have turned out rather differently. Karl Marx and the early English Socialists had rather pleasant ideas. They thought that they could turn industry and large businesses over to people like the Leader of the Opposition and the right hon. Member for Blyth (Mr. Robens) and then everything would be all right. But those early hopes have not been fulfilled.
That brings me to the next question, about the problem of ownership and who are the owners today, and leads on to the question of social justice. It is said, I do not know how truly, that about half of our industrial shares are held by a very small number of people in the country, about 100,000 to 150,000, although there are 1½ million shareholders in all producing a very wide spread of shareholders. When one examines the list of shareholders one finds that the shares are held mostly by retired people, by widows and by the self-employed as well as by institutions like the banks, insurance companies, trade unions and the churches.
When one examines this matter further one discovers a strange dichotomy in our national life which I should like to exemplify by an extreme case. Suppose there were two brothers aged 16 or 18 who were both venturing out into the world. On brother enters an industrial company and by his strenuous efforts and enterprise manages to become quite a high executive in the company. He has a good salary and all the trappings of power. Probably he uses a company motor car and has an expense allowance, and so on. He retires on a pension. But that man, who is a salaried execu-

tive, will not be able to save very much money during his life.
His brother, on the other hand, builds up a small business, a garage or something like that, or takes over a little family business and works it up. When he retires at 65 he is able to sell the business either to a company or to a friend, or on the Stock Exchange, and it will be found that he has accumulated a capital sum of £20,000, £30,000, or even £50,000. That is the strange thing about our industrial civilisation.
There is, of course, a world-wide trend towards big units and big businesses. The need for automation and expensive plants, and the recognition of the value of mass production, will all lead to larger and larger businesses. That will mean that more and more people will become employees in these large companies at every level, because, after all, the chairman of a company is just as much an employee as the humblest washer-up in the canteen. We shall then have to ask ourselves who is to become, or who will become, the owners of these large corporations.
Will it be the State, or a future oligarchy, or a multitude of shareholders, including even the employees? That is a question which will be asked in the future as more of our population find themselves not self-employed, but employees of large corporations. So I say that on all three grounds, of economic stability, political freedom and social justice, we require a wider spread of personal ownership throughout all classes of the community.
After all, in industry at present the power of decision is much more widely spread than many people imagine. The popular conception of industrial life is that the boss gives an order which is then faithfully carried out right down the line, but it does not really happen like that. The manager may give an order or an instruction, but that is modified to some extent by the experience of the foreman and the men in translating the order into terms of their daily work. They have more knowledge and experience of the details of production, so they tend to regard the order of the manager more in the shape of advice than as an instruction.
To that extent in industrial life power is shared widely. But ownership is not


so widely shared. If it were, I think that it would lead to an identity of interests between employer and employed. It is fascinating to reflect that in industry the average amount of capital employed per head of persons in industry is about £500 and, therefore, if a man in a works were to accumulate £500 and bought shares in his company to that extent he would just about own the plant which he works, the machine tools, etc. That is rather a nice thought. It would enhance the workers' self-respect. Ownership of property enhances self-respect. As W. S. Gilbert said:
Prithee, pretty maiden, will you marry me?
Hey, but I'm hopeful …
I'm a man of propertee.
At present the savings of the man in the street are practically all directed towards the State. As I said during the last stages of the Finance Bill on a new Clause dealing with this subject—and I hope that my hon. Friend the Economic Secretary will not mind my repeating it—a solicitor friend of mine who lives in my constituency, and who has a practice very widely spread among people of small means in council house estates and privately-owned estates, has a large experience of small estates going through his hands—anything from a few hundred pounds to several thousand pounds.
My friend tells me that there are six forms of property with which the average small man is concerned—cash in the home and cash in the bank; an insurance policy; some Post Office savings; some National Savings; his house or bungalow if he owns it; and—I know this will please the hon. and learned Member for Kettering (Mr. Mitchison), who, I am sorry to say is not here today, but I have made inquiries since he made this point earlier this week—also shares in co-operative societies, a popular form of investment. But 90 per cent. of property in these small estates is in Government hands. That is true in the case of an estate up to about £5,000. My friend's experience is that nobody enters the share-owning field until he has about that amount of money.
One may ask how the man in the street can acquire industrial shares. There are several means open to him. First, there are some far-sighted companies, such as I.C.I., Rolls-Royce and Lucas, to give a few examples, who have

schemes by which their employees can have shares in their own companies either by way of purchase at favourable rates or by way of bonuses to match the savings made by individual workers. Details of those schemes are set out in a book called "The Challenge of Employee Shareholdings," by Dr. George Copeman, whose work I acknowledge in this field.
Personally, I think that this should be looked at with caution, because I do not want to see all the eggs of a man in one basket. I had some experience of this when I was connected with United Steel, in Sheffield. That company had a far-sighted management who, as far back as 1920, encouraged employees to take up £1 shares at par. But I am sorry to say that by the slumps of 1930 and 1931 those shares had fallen to 5s., so that not only were people losing their jobs, but they lost their savings as well.
I do not think that that is the whole solution. I would rather like to see a revival of old-fashioned provident funds which used to be run in industry, by which companies would put aside money and match the investments of the employees to buy not only Government stock, but stocks of outside companies in other industries. In other words, we can emulate the thrift schemes of the American companies. Another method is for a few neighbours to get together and contribute £10 each and join an investment club by which they can invest and build up a group of holdings.
I suppose that the most spectacular way at the moment is through the unit trust or investment trust, about which we have heard so much lately and on which, no doubt, my hon. Friend the Member for Taunton (Mr. du Cann), if he has the fortune to catch your eye, Mr. Speaker, will illuminate our minds with his experience. The unit trust gives the small man the chance to put in, say, £25, and spreads his investment over 50 companies in this country and overseas. The last method is the one which has been practised by Tate and Lyle's, of opening up in the works what is called a share shop which gives the employees an opportunity to buy shares not only in the company concerned, but in other companies in other industries.
If we are to see this movement spread in a beneficial way, there must be some substantial changes in law and procedure. First, I appeal to members of the Stock Exchange to simplify the system of the transfer of shares. The present method is out-of-date and cumbersome and leads to monstrous delays. Of course, it is not the fault of the Stock Exchange. It is the fault of our company system and our method of registration of shares.
If I may quote a small example, I sold a small parcel of shares at the beginning of January and signed the transfer. I notice that the dividend from the company was paid into my bank in the first fortnight of May. In the middle of May I was asked by the buyer for the dividend—four months after I made the transfer. It is too ridiculous. We should emulate other countries and probably change to a system of bearer shares which are much more easily transferable. I hope that the members of the Stock Exchange and secretaries of companies interested in this matter will pass to the Jenkins Committee on Law Reform relating to companies ideas for simplifying the procedure of the transfer of shares. Our present system is the laughing stock of American investors.
Turning to action that the Government could take, I should like to make four or five suggestions which, no doubt, will be elaborated by some of my hon. Friends who have made a close study of this question. First, as was suggested in the Finance Bill, I should like the Government to agree to the first £15 of all investment income being tax-free. That would allow a man to accumulate £300 and he would know that the interest would be safe. That is true of Post Office savings, but there should be no discrimination of treatment.
Incidentally, in looking into this matter I find that my hon. Friend the Economic Secretary told us that the cost of this would be many millions of pounds. We wondered what would be the cost if Surtax were excluded and, strangely enough, my hon. Friend tells me that it would cost only £1 million.

The Economic Secretary to the Treasury (Mr. Anthony Barber): I said that the cost would be reduced by £1 million.

Mr. Gresham Cooke: I apologise to my hon. Friend—the cost would be reduced by £1 million.
I am not arguing the case on Surtax at the moment, but I would just interject this point. A peculiar fact has come to light, and that is that if we allowed the Income Tax Act to be amended so that the Income Tax payer only got £15 tax free, the Surtax payer in one sense would be worse off because he pays Surtax on the grossed-up amount of the £15. That is a case which wants looking at. It explains the most complicated new Clause put down in Committee on the Finance Bill by the hon. and learned Member for Kettering on the question of Surtax on dividends on Co-operative shares, which personally I did not understand but which taking it up with him afterwards I found was to get over that little difficulty.
Another step that the Government could take which would be very helpful would be to reduce the Stamp Duty on the transfer of shares. If the Government cannot do that, at least I would ask them to look at the steps at which Stamp Duty is payable on smaller packets of shares. While we pay 2 per cent. on £100, the rate on £26 works out at 4 per cent., because the steps on the small packets are very much higher. Therefore. I think that the Government should look into that question of the amount of Stamp Duty.
Thirdly, I should like to see thrift and provident schemes governed by the Income Tax Acts and Finance Acts widened and redefined. My hon. Friend the Member for Halifax (Mr. Maurice Macmillan) will no doubt refer to this matter, as he put down a new Clause in Committee on the Finance Bill on that subject which was, unfortunately, not called during the debate. I should like to see schemes run by companies in which half the amount of the money invested by the employees was put into Government stocks and half into industrial shares and that the contributions of the employees should be tax-free.
I agree that when the employee withdraws his contributions he would have to pay tax at that stage. A man earning £15 a week might be urged to pay 3 per cent. of his income, 10s. a week, to such a scheme. In Yorkshire, in the old days, many of the provident schemes


fell by the wayside, because they were taken over or gravitated into pension schemes.
I should also like to see assistance given to regular saving schemes suitable for professional men and civil servants, but under the Income Tax Acts these schemes are limited to contributions of £100 a year and to people with incomes of under £2,000 a year. This could be widened so that everyone of reasonable means could be brought into such schemes. Those are steps which, I think, the Government could take to assist in bringing about a wider share ownership throughout this country. I should like to see it grow very rapidly.
Summing up, I should like to see the nation become a nation of owners, particularly of industrial wealth, which would provide identity of interest between employers and employed. That would be a step in the right direction in the overcoming of our industrial problems. This would be the real answer of the West to Communism, and it would enhance the dignity of man and we would become a true property-owning democracy.

11.34 p.m.

Mr. Maurice Edelman: I should like to congratulate the hon. Member for Twickenham (Mr. Gresham Cooke) on his good fortune in being able to move this Motion today, on his choice of subject, and on the manner in which he has moved it. He chose to deal with it only only from the technical point of view, but also in broad philosophical terms.
I think that it is proper that we should be able to use a Friday to discuss the fundamental questions which have been raised in the course of the hon. Member's speech. I have known him for a long time as one of the leading technocrats, if he will permit the word, of industrial relations. He has, further more, a close connection with a firm in the constituency which I represent.
In discussing some of the principles to which he has referred, I want to speak of them not simply in ideal terms, but also with practical reference to the industrial problems which face the country today. I think that if the hon. Member had searched very carefully he could not have chosen a worse day on which to

move his Motion. When one reads the headlines in the newspapers and the reports of equities falling and of Stock Exchange jitters, one can imagine that there is no great encouragement for the ordinary investor today to try to participate in the wider ownership of industrial shares. Indeed, I think that the Motion raises the point that today there are, in fact, two nations in Britain—that which creates wealth and that which seeks to speculate in the product of that labour.
One of the most remarkable phenomena which has been seen in the last few years has been the emergence of the "gamblers' State" as a successor to the Welfare State. One has only to look at the City pages to see the constant encouragement, certainly from the point of view of the newspaper proprietors, the very lucrative encouragement which is given to the ordinary man in the street to take part in the gamble for quick wealth through speculation.
It is not an isolated phenomenon; it is part of the general picture. It is part of the picture in which the pools have become a predominate element in Britain's social life. It is part of the picture in which Premium Bonds have been introduced as an element in national life and as an act of public policy. It is part of the general attitude that it is possible, in the booming West, to become rich without participating in the act of creating wealth.
So it is not unnatural that the heroes of our society are not the people who labour and produce the resources and the wealth of the country; the heroes of our newspapers are the take-over bidders, the people who engage in conspicuous consumption, the people who are suitable for the gossip columns not because of any merit or quality in their performance, but simply because they have been able to become successful through some form of speculation.
Therefore, my major point is that we should concern ourselves not merely with diffusing the opportunity of participating in speculation, but rather that we should put our whole emphasis on the extension of social ownership and of increasing the total production of the nation so that there can be a real participation based on justice and on service to the country.
It is no accident that when we look at the newspapers today we find in the


City pages talk of great fortunes made and that in the gossip columns people are promoted to public eminence simply because they have been successful takeover bidders, whereas when we turn to the pages of the law reports we see the Nemesis of that kind of speculation. When one turns to the report of the Chancellor of the Exchequer's statement yesterday, we see the individual Nemesis from which rash speculators suffer, and that fate has now been imposed on very large numbers of small investors all over the country who, encouraged by the talk of being able to get rich quickly, have speculated beyond their means and bought shares at excessively high prices, only to find now that settlement day has come and it is they who have to pay the price.
I think it worth while to consider the structure of shareholding in British industry, and I am glad that the hon. Member for Twickenham touched on the subject. I very much agree with his analysis, which is reinforced by the breakdown of ownership of equity shares in The Times today. What it shows is that, generally speaking, slightly more than half the industrial shares in the country are in private hands, but I think that our analysis should go somewhat further than that.
We ought to try to identify the general trends in shareholding within British industry, and I wish for a few moments to speak specifically about the motor industry, where there are certain significant trends, trends which, indeed, might be regarded as representative of a trend taking place throughout industry. I speak primarily of the trend towards American dominance of the motor industry, a dominance which is moving rapidly into other industries, particularly electronics.
Looking at the capital structure of the British motor industry, one recognises how, year after year since 1945, there has been a progressive extension of North American holdings—I am thinking not simply of United States holdings, but of North American holdings collectively—which is having the effect of putting the British motor industry predominantly in United States hands. I regard it as thoroughly undesirable that a great, strategic industry such as the motor industry should be in American hands.
This leads me to my first argument. The answer to the problem of trying to achieve a wider dissemination of ownership is not just to allow a laissez-faire free-for-all in which anybody and everybody can come into the market and buy shares. I believe that it is more than ever necessary today that there should be precisely that central planning, with which the hon. Gentleman took issue, which will relate the ownership of industry to the strategic needs, both military and economic, of the country.
I, of course, believe very fervently that nationalisation is a practical and desirable means of controlling and owning the industry of the country. I believe that there are many forms of social ownership, but I am convinced that the principal one is nationalisation. Although I should not, perhaps, like to see the total nationalisation of the motor industry, at any rate at this moment, I should definitely like to see the State take over a major firm in the industry and, as has been done with Renault, in France, use that firm to make the running for the industry as a whole. What is true of the motor industry is, of course, true of a wide range of industries which have been failing the nation, which require stimulation, and which require to be fitted into the general pattern of our economy.
I said earlier that one of the great weaknesses of participation in industry today by the private investor is the total absence of control which the small investor and shareholder can exercise. One of the remarkable developments in industry, especially during the last few years, has been the progressive divorce of the shareholder from company control. It is for that reason that I myself, with great respect to my hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) on the Front Bench, am certainly opposed to the recommendations in the well-known document "Industry and Society" for the extended participation by the State in private industry, particularly in the 660 companies.
In my view, if the State were to extend its ownership of shares in those companies without having control, it would then enjoy, if that be the right world, participation and responsibility


without control. Therefore, I should myself strongly oppose any attempt by any Government to enter private industry as a shareholder, profiting from what is put forward in "Industry and Society" as the inevitable rise in capital values, without having control over the organisation or the policies of the companies. Indeed, I think that the concept that there is to be an inevitable rise in capital values in industry may well be based upon a fallacy.
I was interested in what the hon. Gentleman said about the static nature of investment and savings since the 1920s. It shows a rather sinister trend, especially if we compare the state of industry here with the enormous expansion which has taken place in countries which have occupied themselves with the planned and deliberate expansion of their industry.
I do not wish to delay the House much longer, but I wish to speak briefly about a fundamental contrast between the approach of Socialists to the subject of savings and capital investment and the approach of the hon. Gentleman which is based upon the traditional capitalist theory of how investment and savings should be created. Looking at the picture presented by the advancing industry countries of the West since the war, one sees that those countries which have made the biggest bounds forward are those which have deliberately planned their capital investment. I am thinking here not simply of the Soviet Union, from which I have recently returned, incidentally, and where I was astonished to see the tremendous industrial development which has taken place. I am thinking, perhaps, even more of France.
In France, a country which, in 1945, emerged ruined from the war, there was the Monnet plan which carefully and deliberately planned ahead for five years the form of re-equipment which the country required for its basic industries. The matter was not left to the incoherent anarchic play of the market. It was not left to the hunches of the speculators. It was not left merely to the hopes of private investors. There was a plan carefully formulated which has had as its product the tremendous upsurge of French industry which we can see today.
In this country we have had a brief boom phase, the phase of the conspicuously affluent society, the phase of conspicuous consumption, in which imports have steadily risen and exports have correspondingly begun to decline. Now the time has come for the country to pay for this. I feel very sorry for those workers in co-partnership schemes—no doubt, we shall have a reference to them today—who have taken equity shares as a form of bonus and have held on to them.
Workers who have participated in those schemes and have clung to shares of that kind may well find precisely the coincidence that the hon. Member was talking about before, namely, that a national decline or recession, in which their jobs may be in danger, will correspond with a decline in those shares which they were allocated, and which were designed to be a nest egg for a rainy day. The social argument against co-ownership schemes is that the graph of decline in wages and personal conditions follows precisely and inevitably the decline in the value of shares which are allocated to workers who take part in these schemes.
I end by saying that I do not think that there is any substitute for social ownership if we are to achieve an equitable dissemination of wealth. The recommendations put forward by the hon. Member, obviously in the most supreme good faith, are merely an encouragement to speculation by the people who can least afford to speculate. I would take it very ill if the Stock Exchange were to make it easier for speculative shares to be bought. This would merely encourage a trend in which everyone hoped to get rich without participating in the creation of wealth, except, possibly, by seeking a signature on a transfer document.
I hope that the House will decisively reject the Motion, because, although it is put forward as an alternative to social ownership, it is merely a will-o-the-wisp which will lead the nation into a morass.

11.52 a.m.

Mr. Maurice Macmillan: There is an old motto:
If at first you don't succeed, try, try, try again.
There can seldom have been so good a Parliamentary opportunity as my hon. Friend the Member for Twickenham


(Mr. Gresham Cooke) has had to put this nursery precept into political practice. Having failed on the Finance Bill to get the Government to agree to some measures he was putting forward, he now has another opportunity during the same week to press those and other measures on them. I hope that it will not add unduly to the burdens of the Economic Secretary in the heavy week that he has had.
Despite the remarks of the hon. Member for Coventry, North (Mr. Edelman), most of the general principles underlying the Motion will be accepted. There is nothing new in them; they form a specific proposal to do something which, in general, has long been the effort of sincere people in many countries and of many political parties to spread wealth as widely as possible. The principles behind my hon. Friend's Motion will probably have the general support of all parties, and even of the Government. After Wednesday's debate, I had hoped that we would have considerable support from the benches opposite, even if we could not hope for the same degree of support from the Treasury Bench.
In the past, this sort of ownership has received rather more lip-service than genuine attempts to put it into practice. In 1958, at the Conservative Party conference, of the first 67 motions dealing with economic matters, 24 concerned house ownership, 21 the taxation of house ownership and only two the ownership of other forms of property, including industrial shares. Perhaps that was natural in the past, when the wealth of the country was not so widely distributed as it is now. But present conditions have created a different climate of opinion. The incomes of our people are nearer to each other than they were before. More people now than ever before have been able to satisfy their reasonable demands for consumer goods, and their needs and wishes are spreading to house ownership, the ownership of luxuries, and to savings through the National Savings movement, co-operative societies, the Post Office Savings Bank and so on.
I hope that, with the help of Motions such as this, we can extend this spread of ownership into ownership of the industrial wealth of the country. There is evidence that this will come. The public is more sophisticated and better

informed than ever before, not only because of the improvement in education, but through that much maligned medium of communication, television, which has certainly encouraged people to read books—which from my point of view is admirable.

Mr. Gresham Cooke: And even the Daily Herald gives information on this subject.

Mr. Macmillan: Many people will agree that the type of question asked at the last General Election was more informed, more relevant to the issues, and less on conventional party lines, from one side or the other. As my hon. Friend has said, even the newspapers are taking part in this changed attitude; the Daily Mirror has started a strip cartoon about investment.
The timing of this debate, despite what has been said by the hon. Member for Coventry, North, is doubly fortunate, in that it comes at the end of our debate on the Finance Bill and at a moment in our general political and economic life when more people than usual are thinking closely about these questions. There is a political as well as economic relevance to the Motion. I hope later to show that it could be helpful, economically, through encouraging investment in under-developed countries, but there is also a direct political significance, and from some of the remarks made by the hon. Member for Coventry, North, I am led to hope that I will carry him with me at least part of the way in my argument.
There is no doubt that in the ideological struggle Communism has the advantage over Western democracy. It can direct its economic effort without worrying about the needs or desires of its home population; it can afford to allow political considerations alone to direct investment policies overseas, and it makes a direct and positive appeal to that element in all men which welcomes an imposed discipline and provides the security of an all-embracing organisation. Western democracy, by contrast, can invest its surplus abroad only after home demand has been met; it requires from its citizens a great measure of self-discipline and voluntary co-operation with the Government, and its peoples inevitably feel a lack of


security in that they are at times required to think for themselves.
On the other hand, apart from economic efficiency—which those of us who are not Communists believe the West can offer—our form of democracy offers freedom to its people. But if this is to be a genuine alternative, it must be real freedom. There are many ways in which the independence of the individual can be secured. It can be done by means of his membership of some society which gives him, in the collective body, a strength which as an individual he lacks; trade unions are a very good example of such a society. It can be done by means of privilege, legal or otherwise, attached to a specific status—such as guarantees the independence of doctors, lawyers, Members of Parliament and even infants. But one of the best defences of individual liberty is private property.
I was not clear what the hon. Member for Coventry, North meant when he referred to social ownership. Unless he was implying that the whole of our means of production, distribution and exchange should be taken over by the State, there is room for what is known as the private sector. I do not want to make this a party political argument, but however much one side of the House may disagree with the other, or even Members of the party opposite among themselves, about the amount of State ownership, all except those who believe in the complete State control of our economic effort must allow some freedom to the private sector.
This freedom in the private sector is illusory if the ownership of that sector is concentrated in too few hands. I cannot see the objection of the hon. Member for Coventry, North, even from his own Socialist viewpoint, to measures which are designed to spread the ownership of the private sector of industry as widely as possible. That freedom which democracy can offer can be quite illusory if the ownership of power is concentrated in too few hands or is too indirectly owned for control to be exercised. As my hon. Friend the Member for Twickenham said, this is especially true when our fiscal system gives great advantages to the owners of capital over the earners of income.
I agree with the hon. Member for Coventry, North that our society is developing into one in which it is a great advantage to be a dealer as opposed to an earner. The hon. Member exaggerated the picture, but nevertheless that is undoubtedly so. There is nothing particularly wrong in being a dealer and nothing wrong in owning capital, and nothing very immoral about increasing it. But, with the high cost of the Welfare State and the increasing Government expenditure, the high level of direct taxation makes it difficult for the earner of even a high salary to acquire capital and much easier for the owner of even a small amount of capital to increase it.
I should be out of order if I discussed taxation in too great detail, and we have had enough of it in the last few weeks, but it is true that all Governments within recent years have recognised this position by their attempted remedies against abuses and against tax dodging, whether in the form of tax-loss farming, dividend stripping or the other abuses of which we have heard. To my mind, these measures are largely useless, because they aim at the wrong objective. When the Treasury finds loopholes in its system, it always tries to cast the net wider rather than to make the mesh of the net smaller. In so doing, it tends to create more abuses and a great incentive to dodge the measures that it has produced.
Our fiscal policy now seems to me to be entirely negative, one of prevention, of preventing people doing things, rather than encouraging them to do the opposite. In ordinary life, it is quite impossible to pull one end of a see-saw down without pushing the other end up. In our economic life, that is what the Treasury is continually trying to do, and even the Treasury is bound to fail.
That is why, in considering the Motion, I should like to say a little about the position of salary earners, including Surtax payers, because the Motion is concerned not only with what might be called the conventional small saver, but with all who depend primarily on wages and salaries, who, we would all agree, are penalised by our taxation system compared with the business man. Even the large salary earner as an employee is in some ways


in a worse position than the small individual business man.
It has been suggested, mostly by hon. Members opposite, that the remedy for this sort of situation is a capital gains tax. That has the great disadvantage, however, that, unless it is a swingeing tax, the experts seem to regard it as ineffective. In an inflationary situation it is a tax on fictitious values, and in a deflationary situation it may involve considerable repayment from the Treasury. It is, above all, a negative solution.
I should like to think that the sort of measures that the Motion asks the Government to consider would provide a positive alternative, particularly by creating a situation in which there is equity between the various classes of taxpayers. We on this side regard taxation primarily as a method of raising money for necessary Government expenditure. Once having got that on to an equitable basis, the levels can be raised together as necessary. Measures of this sort can help by distinguishing between current earnings, whether capital or income—the distinction is becoming blurred—and genuine growth of capital by encouraging saving and by encouraging capital formation if necessary through tax concessions on the part of the Government.
Some of those concessions were set out on the Order Paper last week. Nearly all of them which we have been asking for immediately are contained in a pamphlet written by Dr. Copeman which my hon. Friend the Member for Twickenham quoted. They are designed initially to help the small saver, but they would help to rectify the anomalies in our fiscal situation which I have set out. I do not want to weary the House with a lot of intricate details about our proposals, but I should like to be precise enough to indicate that the ideas which we are putting forward are at least practical.
The measures which have been suggested initially are, first, that the management expenses of unit trusts should be a chargeable expense for tax purposes. This was proved practical enough for the Government to accept. We then pressed for the abolition or reduction of Stamp Duty. My hon. Friend has told the House of some of the anomalies that exist, apart from its harsh effect on small

transfers of shares. I am not being overoptimistic if I detect a cautious hint from the Treasury Bench that perhaps the Government might one day envisage the sort of situation when they might consider reducing Stamp Duty. I suggest that if they went so far as to reduce it by, say, 1 per cent., they might even find that the yield increased.
The next proposal which we put forward was that the 1952 Income Tax Act should be amended to allow company thrift plans—that is to say, schemes for combining National Savings and other loans to Government with savings in industrial shares—so that in this country those plans would receive concessions similar to those now granted in the United States.
Our fourth proposal was that we should consolidate the present concessions towards various forms of saving. There are now many privileged forms of saving—the Post Office, trustee savings banks, National Savings Certificates, some forms of pensions schemes, life assurance and deferred annuities. I should like to see those concessions consolidated so that the same percentage concession which is now available to these special forms of saving will be available to all forms of saving, including shares directly bought by individuals. There are obvious and demonstrable difficulties in this which I need not elaborate this morning, but they are not difficulties which are impossible to overcome, even if it is a question of the taxpayer making a claim, which could be done in the same way as it is now done with other allowances, with the burden of proof upon the claimant.
I do not think I need go any more into the question of Stamp Duty, but I would say one further word about two other measures. I should like to see a concession made both to contributions to excepted provident funds and to regular saving schemes, as I do not think it is right that the Government should seek to dictate the method by which the individual saves. It is not so much that I should like to see more tax concessions for savings but rather an extension of the present concessions to more and different media of saving and, too, to abolish the arbitrary discrimination not only against the cooperative societies which we discussed at great length the other day but against all


forms of saving so that individuals and groups are treated alike.
I think it has been clearly demonstrated over the last few days that the Chancellor is more concerned now with restricting purchasing power than with balancing his Budget. Though the sort of suggestions I am putting forward do mean that the sums accruing to the Treasury by way of taxation are reduced, they do not mean that there is any increase in purchasing power released by them, because they are concessions only for saving. The only exception to that is Stamp Duty. As I suggested, that might even at a lower rate provide a higher yield.
Apart from the social difficulties which our financial and fiscal system produces, we are permanently balanced on a knife edge in our economy, and we have all seen the need for the measures which have recently been taken. Personal spending is on the increase and personal savings are at the moment proportionately static. Investment and expansion are less than other countries'.
I do not want to weary the House with a great number of figures, but if we take the figures for private consumption, gross national product, and gross domestic fixed capital formation, and compare Germany, France, the United States and the United Kingdom, we shall find that, although German and French expenditure is rising very greatly, their gross national product has kept pace and their formation of capital has more than kept pace, while in the case of the United States and the United Kingdom the reverse is true.
Taking 1953 as 100, private consumption in Germany, for example, was 146 last year. Its gross national product, again taking 1953 as 100, was 147, and gross domestic fixed capital formation 170. The equivalent figures for France are: consumption, 123; gross national product, 129; capital formation, 149. Equivalent figures for the United States are: private consumption, 122; gross national product, 115; fixed capital formation, 117. The equivalent figures for the United Kingdom are: private consumption, 118; gross national product, 115; capital formation—better than the United States—31.
This reinforces the argument which my hon. Friend the Member for Twickenham set out.

Mr. Edelman: The hon. Gentleman has just said that the figures he has quoted reinforce the argument of his hon. Friend, but do they not rather reinforce the argument for purposeful Government control and direction of investment?

Mr. Macmillan: As I understand it, this means that the hon. Gentleman is arguing that they reinforce the argument for compulsory savings by increased taxation. I am merely arguing that our consumption is too high compared to our gross national product.
I have more figures to add if the hon. Gentleman would like them. Our total savings since 1952 have been running at between 16 per cent. and 20 per cent. of the gross national product. Taking personal savings only, since 1952 they have been running at between 7 per cent. and 8½ per cent. of personal incomes.
The conclusions which I have drawn from these figures are, first, that the proportion of personal income which is being saved has remained roughly the same, that this proportion is not sufficient in view of our consumption, and that what is required is an increase in savings and so investment. This involves new savings; to my mind to induce people to save more, and to induce those who have not been in the habit of saving to do so, means giving them more opportunities for investment and for return on their capital.
I think that this sort of measure is helpful to our economy because, in so far as it succeeds, it does restrict spending and must, therefore, help our balance of payments situation. It is also a direct help in increasing capital. We have, as the Chancellor mentioned the other day, a chronic shortage of capital both for home needs, as I have given figures to show, and, compared with other countries, for development in the Commonwealth and the other underdeveloped countries. Again, the French record is better than ours in this. There is a new need for capital which is possibly becoming urgent and dangerous, the need arising out of the European Economic Community and the consequent possible necessity for


our manufacturers to manufacture within the Community if they are to succeed in selling against foreign competition.
The hon. Gentleman quoted some figures about American capital. Personally, I find the flight of American capital from the United Kingdom to the European Economic Community more alarming than I find the amount of American capital here. At the moment, roughly half the United States capital investment in Western Europe is still invested in the United Kingdom, but in the first four months of this year there were only two major Anglo-American partnerships in the electronics industry and one major United States investment in aluminium in the United Kingdom, compared with ten new United States projects started in the European Economic Community; that seems to me to be a trend much more dangerous to our prosperity than American investment in this country. Some of the new American investments are for new projects by large companies venturing into Europe for the first [time. A survey recently done in the United States shows that American manufacturing companies expect to spend this year 47 per cent. of their total foreign outlay in Western Europe, excluding the United Kingdom—a greater investment than that in Canada and Latin America combined.
I do not think there is a great deal of disagreement about the sort of problems that I have tried to describe, and I mention them only because I feel that the urgency of these problems needs emphasis, particularly in view of the Treasury approach to them. I agree that we have evidence that a difficult situation is being dealt with in good time, and that because prevention is better than cure, early preventive action has been taken. I agree, too, that with our population and size—and how very different is France in being able to support her population—our economy is always bound to be finely balanced. I wish the Treasury would sometimes deal with it by positive action, rather than try to deal with it by negative action. I wish the Treasury would try to increase savings and investment, and that is why this morning I am recommending the sort of tax concessions which do not increase purchasing power.
The similarity between the figures for the United States and the United Kingdom which I have quoted shows that there is the same sort of difficulty in both those countries, because America too is threatened with balance of payment difficulties. To my mind, we are collectively living beyond our income. I do not agree with the hon. Gentleman opposite that this is entirely due to the sort of people who get themselves into the gossip columns. In my view, the general run of our population is demanding more, from abroad particularly, than our production and overseas sales justify, and the measures, both fiscal and otherwise, that we put forward to deal with this are negative, as are the measures to deal with taxation abuses. I should like to ask for positive action to reduce anomalies in the field of taxation as well as to deal with difficulties in the broader economic field.
I have indicated some of the practical measures which could be taken now to help the small investor, and I have tried to show that I believe that they would be helpful to the economy as a whole. In order to deal with this problem, I think we need a more radical approach, and need to examine more closely than we are doing at the moment the whole economic trend of our life.
I know that the first consideration for economic security, which is mentioned in the Motion, means stability of the £ sterling, so that we can have steady prices and full employment, but to me that demands an expansion which can only be effective if the pyramid on which it is based is broader through wider ownership and more people being personally concerned. I do not believe that we can, or that we dare, any longer work in our industrial life on the basis of "us" and "them." Instead of that, it must be "we."
So far as political freedom is concerned, I think that both the export of capital for the development of the backward countries, to guard the democratic way of life there, and the freedom of the individual at home from tyranny and pressure by the State or by powerful organisations, equally demand a wider spread of ownership; I am certain that social justice, not only in the rights of


the individual but also his duties, demands his greater participation as an individual, and not only as a member of a group, large or small, in the economic life of the country.
The hon. Gentleman mentioned that there are many people who are concerned, the Stock Exchange and other bodies, but it is only the Government who can give an effective lead, and I hope that the Economic Secretary's answer this afternoon will show that they intend to do so.

12.25 p.m.

Mr. Jeremy Thorpe: May I begin by congratulating the hon. Member for Twickenham (Mr. Gresham Cooke) on introducing the Motion. If I may be forgiven for indulging for a moment in a diet of meat when, on a Friday, we ought to be eating fish, I wish to say that it is a rather sad commentary that we should be asking the Government, who have been in power for nine years, whether they will consider whether any action can be taken to remove the obstacles which may deter small savers from investing in industry. It is a very sad commentary that the Government should politely hive to be asked to be so kind as to make an investigation and give us the benefit of their advice.
I do not intend to follow the hon. Member for Halifax (Mr. Maurice Macmillan) into the paths of the Common Market for fear of being out of order, but if I interpret his speech today as suggesting that we should go into the Common Market, I hope that in so far as he may or may not have access to any influential quarters in his party, he will use this influence to see that we do so.
We are still in this country, in Disraeli's phrase, two nations. The Industrial Revolution brought with it tremendous inequalities in social wealth and power, and certainly some of the ugliest buildings that have ever been given to the world. Do not let us be under any delusion. We still have an incredible imbalance of wealth in this country, and the time has really come when the second industrial revolution should follow the first. The second industrial revolution will change the relationship between capital and labour, will change the whole shareholding structure in this country,

and will, for the first time, give the people a stake in our industrial society.
The hon. Member for Twickenham mentioned the capital shareholding in this country. It is very significant that ·2 per cent. of the people of this country own at least half of the ordinary share capital, and that from 1947 to 1958 only 3·4 per cent. of taxable revenue was represented by Estate Duty.

Mr. Gresham Cooke: Is the hon. Gentleman counting persons as individuals or counting corporations as individuals?

Mr. Thorpe: I am grateful to the hon. Gentleman for that intervention, because I was counting the former, because I think we are discussing individual holdings, as opposed to corporations, for example, the trade unions, insurance companies and so forth.
We are still in an economy of monopoly capitalism, and I was very interested to see the other day an example of what happened in an industry in which the workers are shareholders. There was a strike in America in the aircraft manufacturing industry as a result of which a 10 cents an hour increase in wages was awarded to the workers. There was a foundry in Alabama which was unable to pay that increase, and in which 45 per cent. of the shareholding was in the hands of the employees. They went to the management and said, "This is a concern in which we have a certain economic interest, and we want this concern to survive. We will not come out on strike, provided that you—the management—will allow the trade union to put in its own efficiency experts and make a report".
They made a report, which stated that the equipment of the foundry was out-of-date, that it should revolutionise its methods and that its techniques were out-dated. It mentioned a figure which it was suggested was the cost of carrying out these reforms, and the report said, in effect, "We will underwrite a loan as to 50 per cent. of the cost of revolutionising your methods. If you will do this, we will work at the old wage for a period of one year." What was the result?
At the end of twelve months the foundry was paying its way and was not


only able to pay the 10 cents an hour increase but to make it retrospective to the date of the award, which is something very difficult to imagine happening in this country. I hope that that will be the sort of society and the sort of interest in industry that we shall be able to create, not merely by workers holding shares in the works where they are employed, but also holding shares in other firms and factories.
I hope that I may be forgiven if I am slightly cynical in passing, but one cannot be equable in the sight of humbug. We have known that the Tory Party for a very long time has been passionately interested in the spread of wealth. The other day when my colleagues and myself moved an Amendment to try to remove the tax disincentives which precluded employers from issuing shares to their workpeople—an annual event in which the Liberal Party indulges—even though as many as five out of the six Liberals turned up, the sixth being indisposed, we were outnumbered by hon. Members on the benches opposite by eight to five. It is true that five of those eight hon. Members opposite had to be there, the two Whips, the two Treasury representatives and the Parliamentary Secretary, but they made the number up to 234 in the Division, and that number included the five authors of "Every Man a Capitalist," including an hon. Member opposite who had appended his name to the Liberal Amendment and had spoken in favour of it.

Mr. W. R. van Straubenzee: I should like the hon. Member to tell me how the five authors of "Every Man a Capitalist" managed to do that since, looking quickly down the list of names, I find that four of them are not Members of the House.

Mr. Thorpe: I am only quoting from the Conservative Party bookshop, and if there are inaccuracies I apologise on its behalf. But I see that included were the right hon. Member for Blackpool, North (Sir T. Low), the hon. Member for Eastleigh (Mr. D. Price), the hon. Member for Scarborough and Whitby (Sir A. Spearman), the hon. Member for Wokingham (Mr. van Straubenzee), and another hon. Member whose name is familiar but whose constituency is not. I also have the Division list, and I

assure the hon. Member that I checked it very carefully.
One must, therefore, be a little cynical about speeches which emanate from hon. Members opposite about the need to spread wealth. We really need a revolution first with regard to the Stock Exchange which I think is typified in its attitude to the public by the headgear which its members are seen to wear in the City. If the Stock Exchange is not going to be interested in selling shares in small units to members of the public, we might consider the possibility of having Government brokers with share shops in the industrial centres which would be able to sell 10s. or 20s. worth of shares at a time. That is one way in which the Government could help. We should also consider the total abolition of Stamp Duty on share transfers. It would be a tremendous incentive to shareholders.
There was another suggestion which received the enthusiastic hearing of the eight hon. Members opposite who were present—that there should be tax remissions to companies which set aside contributions as shares to be given to their workpeople. I should also like to see the nationalised industries raising their capital on the open market and having to compete in that market like any other industry for share subscriptions from the public. We should consider the possibility of shareholding not merely in industry but in farms. I know of one or two farms where shares are issued to the workpeople. In one instance in the first year every farm-worker had a dividend of £100 at Christmas.
We have only begun to scratch the surface of the spread of wealth in this country. I noticed during the debate on the Finance Bill an Amendment in the name of the hon. Member for Halifax and others. Needless to say, being logical, we on these benches were present not only to hear it moved but to support it. It proposed tax relief on the first £15 of savings interest, and I should like to see a form of industrial savings in which dividends would be put into an account which would be tax-free for the first £15 and no tax would be paid until these moneys were withdrawn.
These are same of the ways in which we can encourage this movement, but this reform cannot come about by moving Motions every nine years or so and asking the Government to be kind enough to do something about it. There are honourable exceptions. I remember travelling in the train a few years ago with the hon. Member for Taunton (Mr. du Cann). He will recall that I said that if his party really wished to make the capital popular in this country it should start unit trusts and encourage people to buy equities. The hon. Member listened very carefully. He is a man who is a fast worker. He said that he entirely agreed with me and thought that I had a very good point. Next morning I opened the Financial Times and saw that a unit trust with which the hon. Member's name was associated had been established. I thought afterwards that if advice from the Liberal benches was taken as quickly on all occasions how good that would be.

Mr. Edward du Cann: I remember that conversation very well, and I have always appreciated the support of the hon. Member and that of his hon. Friends, but I think in honesty he will concede that I had the idea just a little time before that.

Mr. Thorpe: It is possible, but it was the encouragement and enthusiasm which I was able to give the hon. Member that carried him over the last jump. I am still expecting a directorship in consequence.
I would say to the hon. Member for Twickenham that his Motion is being addressed to the wrong audience. I do not say this in any partisan sense, but hon. Members on the Labour benches are not interested in popularising the capitalist system. The analysis of Socialism is that capital per se is evil, but Socialists have been compelled to conclude that there must be peaceful co-existence. They are not interested in giving the people a vested interest in a capital system.
There is certainly no reason to address words to the Liberal Party which has given a lead in this matter consistently in the last thirty years. Annually we bring forward Amendments to the Finance Bill and annually we have kind

words from the Treasury Bench and little else. When I hear enthusiasm for these matters during elections and then we have cold water poured on them during debates on the Finance Bill, I am reminded of a judge who decided a case in favour of a plaintiff on a certain set of facts one year and the next year, on the same set of facts, awarded judgment not to the plaintiff but to the defendant. Counsel addressing him said, "My lord, with great respect, you were in favour of the plaintiff when these facts were before you last year and now you have awarded judgment to the defendant." The judge replied, "But things do not appear to appear to me now as they appeared to appear to me then".
The hon. Member for Twickenham must approach his own Treasury Bench, the supporters of his party in industry, and the supporters of his party in the Stock Exchange, and there are many of them, who are rather slow in realising that if capitalism is to survive it must not be a monopoly capitalism. It must be a capitalist system in which every man has a vested interest and in which equity is owned by those who make £10 or £15 and perhaps even less per week. We shall then have a healthy society. We shall need a tremendous amount of capital to develop the Commonwealth and our colonial empire and to expand industry. I very much hope that the hon. Member for Twickenham will be successful in his efforts, and I hope that next time, instead of asking the Government to consider these matters, he will say to them that the time has come for them to go about their business. If that means that he will have to start a barrage of what I would call "Narbarrotic noises", we on the Liberal 'benches will give him our warm support.

12.40 p.m.

Mr. John Tilney: Like the hon. Member for Devon, North (Mr. Thorpe), I congratulate my hon. Friend the Member for Twickenham (Mr. Gresham Cooke). I apologise to the Economic Secretary to the Treasury and to the House for the fact that, owing to a very long-standing constituency engagement, I may not be able to remain here throughout the whole of the debate.
One of the reasons for my intervention and for an indirect interest in the debate is that I have been a member of the Liverpool Stock Exchange for thirty years. Oddly enough, despite the scoffing terms used about the Stock Exchange by the hon. Member for Devon, North, I am in agreement with much of what he said. In Liverpool, I have seen bus-loads of shareholders from I.C.I. coming in to sell their shares the moment they have received them. I regret that very much, but I make the point to show that we must not minimise the difficulty of broadening the whole shareholding system in this country, which I very much want to do. I believe them to represent only a very small fraction of the number who have those shares, but I have seen brokers' offices beseiged by queues of small shareholders endeavouring to sell their shares. I do not believe that that is a good thing if it can he avoided.

Mr. Thorpe: Is it not a fact that, in 1954, 60 per cent. of the I.C.I. shares which were issued to workpeople were retained by them and that that figure has gone up and up, with the result that there is now a far higher percentage of retention than there was when these shares were originally issued?

Mr. Tilney: I said that it was probably only a small fraction, but it is a bad advertisement to people to see that happening, as I have seen it happening in Liverpool.
It is true that some brokers in the Stock Exchange dislike small deals. These are expensive—at least 10s. a deal and, with overheads, probably very much more. Like the hon. Member for Devon, North, however, I want to see more and more capitalists. I agree with him that the Labour Party do not want to see that. On the other hand, I believe that the people of this country, as the General Election showed, want to see more and more capitalists and want to share in the growing wealth of this country. I believe that a broadening of the capitalist State is good sense for this country and, if we are to create a property-owning democracy, good sense for the workers themselves.
As my hon. Friend the Member for Twickenham said, it is not all advantage; there are very substantial risks. Markets can go down as well as up,

even in this perennial age of inflation. Even within an expanding economy, some industries will wither and, if all their eggs are in one basket, the shareholders will suffer accordingly. I should therefore, regret a system whereby one encouraged a worker to put all his savings in the job in which his earnings, too, were made. The situation is different for such great giants of industry as I.C.I. and Courtaulds, which are so well diversified, or even with Tate and Lyle, who have established, as my hon. Friend said, a share shop, at some considerable expense to themselves. I regret to say that only a very small fraction of their 9,000 workers have availed themselves of that opportunity.
It is immensely important that, be it by unit trust or, as I would prefer, by an investment trust, the workers' equity savings should be diversified. I say deliberately that I should prefer an investment trust in that if markets went down, only one share would be affected, whereas in a unit trust, if a mass of people lose confidence there is a dribble of small sales affecting a large number of shares, and that affects detrimentally the whole atmosphere of confidence in the Stock Exchange, and the downward movement may, therefore, gather way.
I believe that the small investor in this country has only just become aware of the stock market, and our industrial opponents in the world are not only catching us up, but are ahead of us in this. On my desk the other day I found a bulletin printed in Bonn which is a weekly survey of German affairs, issued by the Press and Information Office of the German Federal Government. Germany is possibly our leading competitor, certainly on the Continent. In an article entitled "The 'Little Man' and the Stock Market" I read:
What is the best way to provide for one's later years? In Germany, the traditional answer for most moderate-income people has been to lay aside hard cash in a savings account and perhaps in an endowment life-insurance policy.
That is very much as it has been with us.
The article continues:
Recently however some of the younger breadwinners in particular have been questioning whether cash is necessarily the ideal ingredient for a retirement fund. They have the economists' word for it—if they haven't


noticed the fact as they shop—that the buying power of the Deutsch Mark has been dropping at something over two percentage points a year. It is small comfort to be assured that this development is true of most currencies today, as national economies keep expanding … More and more wage earners are entering the stock market … This stock-buying trend among moderate-income groups is new in Germany. For example, in 1957 a West German steel company offered to sell some of its stock to employees, but few were interested. It repeated the offer in 1958, with more takers. Last year, it could not supply enough stock to satisfy its employees' demand.
This article goes on to explain how, under the sponsorship of a big industrial company and the Deutsche Bank, there is a system whereby all the workers have a stock savings book. They sign a form so that every month a certain percentage of their wage packet may be deducted, and they also decide whether those equity savings should go into a purely German portfolio or into an international portfolio. I believe that we have a lesson to learn from what is happening in one of our great competitor countries and that we could well follow suit.
Before we do so, however, the public must be educated in share ownership. The difficulties are considerable. My hon. Friend the Member for Twickenham referred to the small capital growth compared with the 1920s. It may well be that taxation is much too high, but there is also a feeling in some quarters of the community that it is almost wrong to save. I have met it in certain parts of England. In freedom, of course, we are lucky in this country to be able to spend our money as we like, be it on gambling, on beer, on horse racing, on dogs or on anything else.
Some people prefer, instead of investing, to buy refrigerators and washing machines on hire purchase, which, in a way, is a form of saving, certainly on long-term consumer goods. But many, I regret to say, perhaps the vast bulk of the country, do not understand the Stock Exchange. They are wildly irritated by the long delays to which my hon. Friend has rightly referred. If we are to build a property-owning democracy we must reduce the cost and trouble of share ownership.
To some extent this is due to the Stock Exchange system, and I believe

that it could be altered by the Stock Exchange itself. But to a greater extent it is because of our method of transfer. Our present system is, I believe, incapable of dealing economically with small deals and the small investor. The public is thoroughly muddled about the Stock Exchange, our somewhat recherché London dollar prices, our dividend claims and nominal values. In dealing with the Stock Exchange and the method of transfer they do not begin to understand all the difficulties and the reasons for those difficulties and delays.
One has to bear in mind that a change of share ownership in the United Kingdom requires a contract note and a stamp; a transfer and a stamp, and a share certificate, each with its respective acknowledgment. In addition, through the delays to which my hon. Friend the Member for Twickenham has referred, there are possible dividend and rights claims.
We should also bear in mind that the transfer must be signed by both buyer and seller, and that frequent hold-ups are caused by the difficulty in obtaining the buyer's name and by postal and personal delays as well. Another aspect to bear in mind is that the sale and purchase of any quantity of stock that is not a round number may cause a large number of what is known as split "names," with their extra transfers and other complications.
Registration, too, can take a long time with some companies. There is the extra cost of 2s. 6d. for the registration fee which, luckily, quite a number of companies are doing away with. There is the problem of the 10s. jobbers' stamp and the physical problem of getting every transfer stamped in the Stamp Office, all of which can take a long time. The present system of share exchange is both cumbersome and expensive. I hope that the Economic Secretary will get his experts at the Treasury to look into this problem, because I cannot but believe that improvements are possible.
At present, the whole system is weighted against the small investor. It is not easy to find a solution. In the long term I, too, would like to see no par value shares, and what is known as American scrip, because the registration system here wastes much time and


manpower. Yet, however out of date it is, it is not open to fraud and any system that we evolve in its place must equally not be open to fraud. Obviously, there is certain action that can be taken now both by the Government and the Stock Exchange.
If Stamp Duty cannot be reduced because of the revenue that it produces—and I realise that it is essential that the revenue be kept up—it might be possible to obtain it by a levy on brokers' contracts on deals in securities other than Government securities. Might it not be possible for stamping machines to be provided in brokers' offices in the same way as there are franking machines for postage stamps? Is not it possible to have a wider use of the 10s. jobbers' stamps?
I believe that the Stock Exchange could simplify its own charges to make the small deals, if possible, less expensive. I would like to see a single percentage charge which the public would understand, and one national Stock Exchange. Remembering all the time that the ideal system, as I see it, should be that the buyer receives only two things, the contract note and the share certificate, if one could reduce the procedure to these two items, it would be much easier to stimulate the small shareholder.
I have two further points which I wish to put to the Economic Secretary. I suggest to him that the trustee savings banks and, possibly, the Post Office Savings Bank should organise centrally an equity investment trust, the units of which could be bought by the public in a limited quantity similar to premium bonds. I cannot see that there is anything difficult, in this electronic age, in organising a system of that kind. The equities should be spread among the major industries.
The other point is that if the boards of industrial companies are to water their capital by giving some unissued shares to their workers, then they must have a financial incentive so to do. I cannot believe that it is impossible to adjust the profits tax for those who do give their capital to their workpeople in this way. Finally, if we are to establish a property-owning democracy, which so many of us want, certainly in the Liberal Party and above all in the

Conservative Party, let us remember that shares in this modern world are just as important as houses.

12.57 p.m.

Mr. B. T. Parkin: In the earlier stages of the speech by the hon. Member for Liverpool, Waver-tree (Mr. Tilney) I found myself in the familiar situation of thinking that here was a man probably with whom I could be in agreement if only we could establish the meanings of words. But if we have to pursue discussion of this kind on the basis of what he thinks that we think is capitalism, then we have a great deal more sorting out to do before coming to a useful conclusion.
In the second part of his remarks I thought that the hon. Member was getting lost in an enthusiasm to reform machinery, which also is meaningless at present. Indeed, it is as out of date as the jargon which has changed its significance over the years.

Mr. Tilney: If the hon. Member finds it out of date, surely he wants to do something about it.

Mr. Parkin: I do, and that is why I am glad of this debate and why I join with hon. Members opposite in congratulating the hon. Member for Twickenham (Mr. Gresham Cooke), who raised the subject.
In addition, up to now the discussion on the other side of the House shows a tendency to concentrate on some minor reforms of machinery which they hope the Government might encourage instead of looking at the wider issues,—which the hon. Member for Halifax (Mr. Maurice Macmillan) touched on, and which I am sure are present in the minds of Members opposite—such as the need to save more, to 'broaden the basis of belonging in society, and to catch up with out competitors in other parts of the world where people organise investment programmes better than we do.
It is a pity, therefore, that the rather ambitious ideas of the Motion, which promises economic stability, political freedom and social security if only we examine this problem properly—and I do not dissent from these aspirations—have finally settled down into a discussion of how best to dispose of minor shares in industry.
I think that it is fair to follow the lead of the hon. Member for Twickenham who seemed to concentrate his proposals on the need for facilitating the exchange of ownership of ordinary shares. That is not an extension of personal ownership in industry and it does not touch the case raised by the hon. Member for Halifax—the need for more investment—because we are not here discussing the raising of new capital. That is the first point we must get clear in our minds.
Whether a broker has a stamping machine in his office or not will not make any difference to the total amount of capital available to the limited company concerned, because the broker is only transferring ownership of existing shares. That bears no relationship at all to the investment programme of the company, or to the investment needs of the country as a whole.

Mr. du Cann: Would not the hon. Member agree that it is very often the practice of large industrial companies in Britain to raise additional capital by rights issues, and so on, to existing shareholders, and that it would be a good thing if the total number of shareholders were increased, as there would then be more opportunity for more money to be subscribed through these rights issues so that more capital could more easily be raised?

Mr. Parkin: Yes, I would not dissent from that in the very narrow context in which the hon. Gentleman has placed it, but I am sure that he will agree that if his rules are successful we shall avoid the present rather scandalous position whereby many first offers of shares are placings at a price which can be justified but representing a very small proportion of the capital of the company concerned in the hope that the public will bid up the price to a point at which the remainder of the shares can be sold at a price higher than the assets of the company justify. In his present very successful other career, I am sure that the hon. Gentleman would be the first to want to see that sort of scandal eliminated from the share markets.
I must not be led astray into following in too much detail the arguments which hon. Members opposite have

made, because I want to consider the status of the ordinary shares, since it is ordinary shares about which hon. Members have been speaking. I think that it will be agreed that for the most part the ordinary share is not used for raising new capital and that only a very small amount of new capital is in fact raised in that way.
The ordinary share, the equity share, can give several things. It can give a share in control, but various hon. Members opposite have said how dangerous it is from the point of view of the security of individual savings to ask a man to put his savings into the shares of the company in which he is employed, and it has been suggested that it is very much better that the individual should put his savings into the very effectively and skilfully managed organisation run by the hon. Member for Taunton (Mr. du Cann).
From the point of view of spreading the risk, I do not dissent from that, but from the point of view of spreading control of industry and the democratisation of industry, that is going in the opposite direction. Immense as is the ability of the hon. Member for Taunton, he cannot be an expert on every single company whose shares he looks after on behalf of other people. He cannot go to all the annual meetings and demand that the companies change their technical processes, or that they entirely renew a sales system, or make any other profound difference.
In that case, therefore, even by proxy no control can be exercised by this shareholder. I do not have to elaborate it and I am sure that hon. Members would grant that one of the weaknesses of the system which they advocate is that democratic control by shareholders to any effective extent has disappeared.

Mr. du Cann: I am sorry to interrupt the hon. Gentleman again. To be brief, I merely say, without answering in detail, that what he has said is quite wrong.

Mr. Parkin: I hope that the hon. Member will be more exact. I am not ready straight away to accept the bald statement that the holding of ordinary shares still gives an opportunity for the democratic control of the affairs of a public company.
The second thing that ownership of ordinary shares gives is what is vaguely called a share in the equity. I do not think that anyone would dissent from that as a social purpose. It is an idea which has been infiltrating into many aspects of our national life, particularly into the welfare services and pensions schemes. The idea of an equity basis for contributory pensions appeared in the Labour Party's proposal for a superannuation scheme and was eagerly taken up by hon. Gentlemen opposite, and by other groups of thinkers in the country. It is beginning to emerge as a natural objective and we take it for granted that we ought to have a system in which old people can look forward to a share of the national income when they have ceased to work.
That, it has been supposed up to now, is embodied in the conception of an ordinary share, but in theory the ordinary share still remains risk capital. After hon. Members opposite have convinced the Government and achieved what they are setting out to do today, the next problem will emerge. If hon. Members opposite succeed in improving the machinery and in selling ordinary shares more widely and succeed in getting the notions which have been adumbrated as an explanation of this Motion adopted, they will have taken the final step in a process which has now been going on over several years, which is that the ordinary share is no longer risk capital.
That is immensely important and it is a not sufficiently recognised revolution in our financial system. The whole objective of hon. Members opposite is to make the ordinary share gilt edged and the momentum in that direction may possibly come from the fact that the gilt-edged security as we know it has been under considerable cloud for a number of years through successive periods of inflation.
I am glad to say that people have lost faith in the notion that capital can be preserved for ever, a theme to which I shall return. At present, all the proposed machinery is intended to convince people that their savings will be safe. However, not everybody's savings can be safe. The savings of industry cannot be safe. People can-

not assume that they will be able to continue on a basis that if they put their savings into something they will last for ever. With such a thought, there cannot be the dynamic expansion or will needed to sweep away the old techniques, the old machinery and the old buildings.
With such a basis there will be a vast body of conservative—in the worst sense of the term—reactionary opinion saying, "Don't touch that", and in that respect I am not unwilling to see the destruction of this myth. Hon. Members opposite have spoken tenderly of the disaster of a man who loses his job and his savings in his firm, but such people are not the only people who lose their savings when they lose their job. Many craftsmen lose their tools when their tools become out of date, in the sense that tools are working capital. A craftsman must not assume that his tools will last for ever. It is his brains, his skill, his capacity to improve and keep up to date which must survive.
Once it has been established that the ordinary share is something which must never be lost, it will be very difficult to achieve a blood-letting bankruptcy in the most undeserving company in industry. Someone would come to its rescue. We do not have big bankruptcies any longer; we have little ones. We do not have banks "going bust", or big public companies suddenly announcing that everything has all gone down the drain. It is covered up, absorbed and digested.
Once the ordinary share has become the gilt-edged repository, who provides the risk capital? The answer is evident in the thinking of hon. Members opposite and in the actions of the Government. It was not I who succeeded in convincing my party that it was desirable that the Government should supply risk capital for the whole of industry. It was hon. Members opposite. On what terms? When Lord Chandos considers the question of supplying a new ship to a well-established shipping company, he comes to the conclusion that the Government ought to provide the money, and, what is more, ought to provide it at 4½ per cent.
The hon. Member for Twickenham spoke movingly about the man in the street. Which street—Throgmorton


Street, Lombard Street, or one of the streets in my constituency, where 20 or 30 people share a lavatory? They cannot get a new lavatory or any housing improvements unless the local authority is prepared to pay half as much again as Lord Chandos thinks we, the taxpayers, ought to charge the Cunard Company for the risk capital which it is so essential we should put into its business. After many years it has managed to survive. It was able to go from sail to steam and from steam to something else. But it is now said, "We could not possibly ask the ordinary shareholder to bear this".
When I was young, there were full-page advertisements in newspapers, saying, "A company is being launched to develop a new process". There are no advertisements inviting application for shares at par in a new venture these days. That is the sort of dynamic which I think that hon. Members still have in mind, but it will not come along the lines of the machinery suggested today. Long before another General Election the Conservative Party will nave established the fact that risk capital for British industry has in future to be provided by the community, and at cut-price terms. Hon. Members opposite can think of other examples where they, their party and Government, are busy supplying the risk capital in industry.
Much of it has gone through the defence industries. Many of the most important technical improvements which could be of tremendous value in peacetime expansion have been continued under the umbrella of and smuggled through Defence Estimates, but, none the less, it is risk capital produced by the community. If that is what hon. Members opposite are in favour of, let them say so. I do not think that they will find, provided they solve certain other problems, the same sort of arguments being used from either side of the House if we can now start to discuss how we should solve the problem of risk capital.
There is no doubt that the real problem confronting this country is haw we can save. The issue of public ownership will not be solved by pleasant little remarks by the hon. Member for Twickenham about the Leader of the Opposition and the right hon. Member for Blyth (Mr. Robens). The matter is already settled in China. Who, ten years

ago, would have thought that China would be a menace to the rest of the world, either in an industrial or a military sense? It would have been ludicrous to think so. Yet, hon. Members opposite, like people throughout the world, now regard the People's Republic of China as one of the most powerful influences in the world, and they have tried to get round coming to terms with it.
They accept that planned investment is essential, but when there is a change of view about the Communist industrial expansion, what I regret is that one sometimes hears from hon. Members opposite the remark, "It is easy for them; they have all the advantages". There is a feeling of envy, rather like the Americans trying to get hold of Mikoyan and making a deal, saying, "We will tell you how to make our ice cream if you tell us how to keep discipline in the factory". It seems to me that people want to learn the wrong side of the coin.
The issue is not public ownership. The advantages of that have already been established. The issue is whether we can achieve it democratically. This is where hon. Members on both sides are on common ground. Even though we do not use the same jargon or revere the same machine, I do not think that we are far out in our final objective. My hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) undoubtedly will make some devastating comments about one form of ownership of capital in this country which works and which solves this problem—the greed of those who want to eat the corn green. That is one of the biggest problems of the proposals for co-partnership and a broad control of industry.
Haw is it possible to achieve a reinvestment programme if the mass of shareholders are asked, "Will you have it now and spend it in the summer holidays, or shall we embark on a new set of machines to make a new article and risk it being a success?" We could not do it. This would not be progress; it would be reaction. That is what is happening in the present stage of capitalism. It is eating its corn green. It does not know how to re-equip itself. It will not even finance itself out of its own profits before they are distributed. What a hope it is that we would get people to pass back


profits after they have been in their hands.
I do not want to give this point too emotional a turn, but the man in the street who would like certain property in his house but cannot have it can afford a television and perhaps to yield to the blandishments of the advertiser who says, "If you cannot have a bath we will sell you some powder in a bottle which will make you smell like a mince pie." That is the danger at present—we are selling people the desire to buy a lot of unnecessary things instead of selling them the desire to put back this year's profits into re-equipping so that the reconstruction of this country's industry may be planned.
The problem of savings is two-pronged. We must excite the desire to save, but, at the same time, kill the theology that savings last for ever, because they do not. Gilt-edged should have a negative rate of interest. [Laughter.] The first response is a laugh, but financiers have managed to sell the notion that capital lasts for ever without its being renewed. They have managed to sell the notion that if one buys an ordinary share in a railway one has in some way bought the capital which was put in originally and expended and renewed perhaps a hundred times. We must have the willingness to face obsolescence early if we are to have an expanded standard of living and to compete with the rest of the world. We must establish the fact that the tree does not live for ever and that buildings do not last for ever, but fall down.
In practice, we have a negative rate of interest on gilt-edged because inflation has solved our headache in dealing with that problem. Over the years and centuries inflation has, quite rightly, reduced the value of investment. But we should be in an appalling state now, and nothing which has been seen of the hold of the moneylenders over the Asiatic peasant would compare with the burden which would be borne by this country, if the fixed interest securities were still producing, as interest, money which had the same purchasing power as when the first capital was invested. That is a problem which, in a sense, has solved itself in practice, and it

would be a great help were that accepted in theory at present.
That is enough for today from at least one hon. Member, but I hope that hon. Members opposite will accept the fact that the old definitions are no longer valid; and if we are to have serious discussions we ought to establish what the words mean before we throw them at each other controversially. If we are united in a desire to see an improvement in the financing and investment of British industry, we shall have at some time to face facts. It will not, as hon. Members opposite are saying, be done through the holding of ordinary shares. They have given away the point that the State has to produce the risk capital and they will have to provide an alternative method of getting the consent of the community as a whole to a much greater level of ploughing back annual income than it appears that this affluent society is willing to contemplate today.

1.21 p.m.

Mr. Edward du Cann: I wish, first, to congratulate my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) on his success in the Ballot, second, on his choice of subject for his Motion, and third, but by no means least, on the excellence of his speech in support of the Motion. I have never believed that we should say behind people's backs the nice things which we ought to say to their faces, and I shall have pleasure in saying this to my hon. Friend's face a little later, as he is not at present in the Chamber; but I am glad that my words will be recorded in HANSARD.
I ought to declare my interest. It has been referred to almost continuously throughout the debate, and I think it is probably well known not only in this House but in the country. But it is appropriate to put the matter on record. I am the managing director of a unit trust management company which, I am happy to say, has made very substantial progress. I am happy to think, too, that that company, the first of its type established in Britain since the war, has set a standard of conduct and pattern of operation which has been followed by many distinguished City men. In this debate, we have heard a great deal about the lethargy, and so on, of the City and the Stock Exchange, but this company


has been followed by some of the best names in the City; and will be followed in due course by local authorities and trade unions. I think that a right and proper development, which I cordially welcome.
Many detailed points have been made in this debate, but I wish to confine my speech in the main to matters of principle and to refer incidentally to some of the points advanced by hon. Members, notably some voiced by the hon. Member for Paddington, North (Mr. Parkin) in his most interesting speech. It is perfectly plain that at the present time the man in the street, however we may define him—I think that the man and the woman in the street are totally indefinable—is extremely interested in saving and in investment, which is a good thing. There are many reasons for this. His interest has been stimulated by newspaper articles and, it has been suggested, by television. He has been stimulated by the deliberate attempts of all sorts of bodies, including the National Savings Movement, building societies, hire-purchase companies, unit trust managers and others, to capture his attention, and by means of many excellent company schemes like I.C.I., Portland Cement, A.E.I., and "Aims of Industry", which have helped to crystallise this interest.
I should like to pay tribute to the work which has been done not only by these institutions and companies but by people of whom I do not think we take sufficient cognisance, the devoted workers for National Savings and other organisations. In their several ways they encourage the production of more savings, which is so much in the real and true interest of our country. People have also been doing things for themselves.
One of the most remarkable developments, I feel, and in which I have taken an interest from its inception, has been that of investment clubs—the "do it yourself" unit trusts. There are 400 in the United Kingdom and two years ago there were practically none. If we equate that figure with the figure for the United States and multiply it by, say, three in order to compensate for our smaller population, we get a figure of 1,200 in comparison with the United

States figure of 6,000. So we have already achieved 25 per cent. of the United States total in two years, which I consider a remarkable development and something very much to be encouraged.
People are putting little bits of money together to aggregate larger sums and, at the same time, are learning something about investing and the principles of investment. I will refer in a moment to a way by which I hope they may be helped. I have never believed that there is anything which is done anywhere in the world that we cannot do better in Britain, and I am certain that if we can maintain the impetus towards more saving and a greater degree of share ownership we shall certainly out-do the United States. I think it worth while to try to examine some of the reasons for the great interest which exists at present.
We may say that after owning a washing machine, an electric iron and a television the natural thing is for people to think in terms of share ownership, and that is probably true. But I believe there is a more fundamental reason. Our people are intensely patriotic. We do not wear a Union Jack on our sleeve any more than we wear our hearts on our sleeve, but one need only recall the queues which formed outside the recruiting offices in 1939, or how the people rallied to Sir Anthony Eden's call to join the L.D.V.s in 1940, to realise how intensely patriotic are our people. They have faith in Britain. They appreciate that there is a tremendous growth of prosperity to which they have contributed by hand and brain, and they wish to participate and share in it to a greater degree—and I say jolly good luck to them.
However, we must recognise the dangers which exist in this connection and which have been referred to today. I should like to quote an example from personal experience. The other day, I had a letter from a man who wrote, "Dear Sir,"—that was a surprise for a start—"my problem is this. I have £2,000 and I wish to buy a £4,000 house in six months' time. I understand that the shares of your trust have doubled in value during the last twenty-four months. Can you guarantee to produce a similar result for me within a reasonable space of time? If so, I shall let


you have the money quick. Hoping to hear from you soon. Yours faithfully."
I have made a joke of it, but I regard the matter as being intensely serious. I felt that with that man at least we had failed to some extent to teach him anything about the realities of investment. I believe that all of us, whatever our political views, have a tremendous job to do in educating people in this respect. That is the key to the whole matter. If there is to be a development towards a greater degree of share ownership, it is absolutely essential that the number of disappointments should be reduced to the minimum.

Mr. J. Grimond: I am obliged to the hon. Member for giving way and allowing me to ask a question, which is purely a request for information. When the stock market fell, did the unit trusts run into trouble? Some of these trusts have been going on for a long time during which the market has fallen as well as risen. But I am right, am I not, in saying that this has not led to much trouble for their shareholders?

Mr. du Cann: I am very much obliged for that interruption; I think it touches a point of extraordinary interest. There has been a great revival of interest in unit trusts during the last two years. Since the formation of my own company, the total amount of investment has risen from something like £60 million net to something over £200 million. It is perfectly plain from the total number of 600,000 shareholders that a lot of new people have come in. I have always been afraid that because this movement has coincided, so to speak, with a rise in market prices there might be people who would think this the natural result of investing in unit trusts, was the same sort of result which had been achieved over the last two years. It is pertinent to ask whether there has been any general experience of large numbers of repurchases during recent months. I think there have been some, but I believe that probably the most active trusts have not had this experience. My own experience leads me to state that the volume of repurchases has been nothing at all out of the ordinary.
On the other hand, I think that the general point on the need for education is still valid. If a man were to come to me who was disappointed or who misunderstood the purposes of the unit trust movement, who was ignorant of the essential long-term nature of buying and putting the money away for some time and forgetting about it, I would be a disappointed person.
I wish to say categorically to my hon. Friend the Member for Twickenham—and I am glad that I can now say to his face how admirably I thought he moved the Motion—that I am not in sympathy with the idea of turning every man into a capitalist or a shareholder. I believe there are certain priorities to establish. Before a man ever becomes an investor he should have sufficient cash in hand to deal with emergency situations. Secondly, he should have a sufficient amount of insurance, or whatever may be its equivalent, and he should only invest that surplus which is left over to his private account after having provided for emergencies and having paid for the necessary degree of insurance.

Mr. T. L. Iremonger: Would my hon. Friend say the same if tax privileges were given to investment to the same extent that they are now given to insurance? Might we not find that savings would move from insurance to investment if tax concessions were so extended?

Mr. du Cann: I think that is absolutely right. I am concerned primarily with the idea that a man should have sufficient insurance of some form or another to provide for his dependants in the event of his unlikely death, though I agree that tax concessions could possibly cover a much wider field than they do at the moment.
I should like to turn to basic principles and to say why it is important that we in this House, and especially those of us in the Conservative Party—I will say a word about the Conservative Party's record in due course—should help in this drive towards increased share ownership. The first reason is economic. Beyond everything else, the world is capital-hungry. This applies to us at home and abroad, because we are determined—though I do not believe we are making


a great success of our determination at the moment—to see that our industries are kept fully equipped and up to date.
The amount of capital which each worker requires in each industry is difficult to estimate, but it is probably fair to take a figure of £500 for each worker in industry at the moment. This money and the vast amount of money required for research and development has got to come from somewhere. It can only come from savings of one sort or another.
I do not take the rather gloomy view of British industry which possibly the hon. Member for Paddington, North took in his speech. We have led the world in the development of jet engines, radar and many other developments with which we are familiar in a magnificent way. We can continue to lead the world if only the capital is provided.

Mr. Parkin: The hon. Gentleman obviously occupies a very distinguished position in this movement of unit trusts of which he has spoken this morning. I do not think I have ever heard any criticism of the way that the selections are made or of the administration. The hon. Member is linking this idea with patriotic loyalty to British industry. He recommends that people should invest their money in a most respectable and reliable range of companies. But, of course, the £60 million or £200 million or whatever it may be that goes into his office does not go into those firms. It goes into the pockets of those who previously held the shares in those firms. Has he any idea where the money goes after it has been paid over to the previous owners of the shares? There is no criticism of his judgment as to which companies need support, but that is not where the money is going. Where does he think the money finds its way after it has gone to the previous owners of the shares? Does it find its way into the new developments about which he was speaking?

Mr. du Cann: That is a very important point, and I am obliged to the hon. Gentleman for raising it. I had intended to deal with it later, but I will deal with it now. It can be suggested in theory that all the money collected from investing in unit trusts simply goes to replace previous shareholdings, and certainly much of it does, but money which is

paid out to previous shareholders is again returned in the form of investment. Bearing in mind the enormous number of new issues which are pending, for which unit trusts will certainly be supplying a large amount of capital, I would say that the more people that we can get into share ownership at the moment the more chance there is of these new issues being a success. Anybody who attracts a new investor into the market is doing a service to the whole cause of finding capital.
I have spoken about the need for capital at home, and the same applies abroad. We have every reason to be proud in Great Britain of what we are doing. We are investing about 1¼ per cent. of the national income. I should like to see that figure substantially increased, and not least in those territories abroad for which we have special responsibility. But we can only do that through increased saving. The question at home and abroad is whether or not this saving should be voluntary or compulsory, whether it is dealt with by the Government in increased taxation or whether it is dealt with, on the whole, by private industry.
My view—and I am quite ready to state it clearly in front of Members of the Opposition—is that for all time we shall have a mixed economy in this country and abroad. There are some things which the State must do and some things which private enterprise must do. I do not think there is any need for jealousy at all between those two sections of the economy. The need for new capital in both is enormous. Whatever we can do to raise it must be right for our country and will enable us to live up to our social and moral obligations abroad.
As to the social reasons why it is right to encourage more investment and more share ownership, other hon. Members have spoken about the identity of interest between capital and labour, and the hon. Member for Devon, North (Mr. Thorpe), in particular, had something to say on that point. I would only say that having come into active working life from the Navy after the war, I have always deplored the idea that the interests of capital and labour are not identical. Basically they are. At different times they may vary in detail when wages are discussed in a particular context and at odd times of that sort, but in general


it is right to say that the more that is done to encourage share ownership the better it must be from that point of view.
I very much believe that the aim of this House should be in principle to create a responsible society. I am always sick of hearing people say, "I could not care less". We must create conditions in which people say, "I could not care more". We must create a society in which people are interested in contributing and not in taking. The spread of ownership of shares is an important point in this respect.
The hon. Member for Paddington, North made another interesting point in his speech with regard to control in discussing individual responsibility and in asking the question, how, for instance, did ownership of unit trust shares bring industrial democracy any nearer. I think that he highlighted a most important point. I am sorry that I contradicted him so abruptly, but I repeat what I said. He is, of course, correct when he says that the unit trust may be bringing industrial democracy nearer at one remove.
The fact is that a shareholder in a unit trust is none the less represented through his holding unit trust shares at annual meetings and other meetings of those companies, and a very close watch is kept upon them. I suggest in all modesty, and I personally am by no means an investment expert, that his interests are probably better watched by experts than he can watch them himself. Furthermore, he has control of the shares of the trust and at any time he can sack the managers and replace them with better managers if he feels that they are not doing a proper job for him, which is more than can be said for many shareholders in limited liability companies.

Mr. Parkin: The theory that the gentlemen in Whitehall know better than the experts is not a contribution to the extension of democracy.

Mr. du Cann: I accept that point. I have always felt that one of the essential factors in any drive to increase share ownership is that every man should have first-class advice and all facilities at his disposal. I am merely suggesting that the arrangement of a unit trust—I seem to be led continually into dis-

cussion of unit trusts—is that the unit trust has in fact provided these services for him. It is a matter of argument whether it provides them to a sufficient or insufficient degree, but it provides them to some extent, and, I think, to a satisfactory extent.
I believe that there is a tremendous scope for increase in the total volume of share ownership. We have heard a lot of figures, and I am not clear about some of them or the sources from which they have been derived, but I have details of a Gallup Poll, not generally published, which I should like to quote to the House.
According to a recent survey, only 9 per cent. of the persons questioned had any direct interest in share ownership and investment. Thirty-two per cent. who replied to the sample questions had no savings at all. Those two figures, taken either separately or together, show how far there is to go. Indeed, what can be done in this field is shown by American experience. I have in my hand the annual report for 1959 of the New York Stock Exchange, which states that the number of individual shareholders in the United States grew from 6½ million in 1952 to 12½ million in 1959. In counties, so to speak, like the district of Columbia 14 per cent. of the population were shareholders. In the city of Pittsburg it was 17 per cent. I have probably said enough, without going into more figures which I have here, to show that the scope is enormous.
I agree with what other speakers have said when they have talked by inference about the current economic situation. I frankly wonder why everything that the Government do in times of economic crisis must be repressive and negative. I believe much more in the positive approach, and I hope that we shall see more of it as time goes on, and not least as a consequence of this debate.
I should like to say a word about the rôle of the Government in this matter with reference to the Motion. First, it must be the responsibility of the Government to set standards, and to set those standards high. We suffered from certain scandals in the financial world, notably at the time of the General Election, and the Prime Minister gave a pledge, which was reinforced by other


speakers on behalf of the Conservative Party, that action would be taken. I pay tribute to the way in which the Government have taken action. We have building society legislation, we have the Jenkins Committee sitting at the moment receiving evidence on the 1958 Act, and new rules framed by the Board of Trade for takeover bids and so on.
The rôle of the Government must be not necessarily to control in minute detail the day-to-day activities of those attempting to do a good job in this field, but to set standards and, in particular, to be always ready to crack down on the spivs and the cheats. I am glad to see that the Government are living up to that important responsibility.
The second responsibility of the Government, I am not so happy about. The Government, I feel, have a direct responsibility to give practical encouragement, and I suggest that there are certain direct forms that practical encouragement should take. First, I think that it is clear from all that has been said both on the Finance Bill and this morning that it is high time that general concessions to the savings media should be rationalised. It is quite absurd that there should be concessions for assurances of one sort or another and concessions to the National Savings Movement—very valuable concessions—but that the co-ops, the unit trusts, the hire purchase companies and everyone else should be totally ignored. If one has a family of five children—at least I think so, being a bachelor—one does not give sweets to two of the children and not to the other three. One soon learns how absurd is a system of that sort. I hope that the Government will pay very serious attention to this point. The criterion must be fairness, and the present situation is not fair.
A valuable suggestion was made that the first £15 of interest in any form of savings should be free of tax. Why not let the individual choose his savings media for himself? Why do the Government appoint the various media? Do the Government think that life assurance is better than building society investment, for example? They are in the invidious position of apparently having made the choice. It does not seem to me to be appropriate.
The next point in which the Government could help lies in the field of taxation. I warn my hon. Friend the Economic Secretary, for whom I have every feeling of affection and regard, in advance, that I have extremely strong feelings on this subject. I believe that not only is taxation too high but that to some extent its moral purpose is totally unclear. The man or woman who works hard and honourably during life is heavily taxed. If a man saves from his work, he may get a few paltry and, on the whole, derisory concessions, whereas those people who make a living in less morally defensible ways by betting, gambling and capital transactions of one sort or another get away scot-free. That cannot be right. In effect, our policy is an attempt to tax the virtuous and to let the vicious go free. Again that cannot be right.
I ask my hon. Friend, in all seriousness, what it is that he is trying to achieve through the taxation system, because it is not clear to me, and I believe that it is not clear to the country as a whole. I believe that many people in the country are dissatisfied by this general state of affairs of which there are innumerable examples. Take the case of a married couple living together and both working. As every Member of the House knows and almost every member of the public knows, it is better for them from a tax point of view if they live in sin.

Mr. Deputy Speaker (Major Sir William Anstruther-Gray): The hon. Member should bear in mind that speeches on the Finance Bill have been in order on other occasions. Now we are on a rather different Motion.

Mr. du Cann: I accept absolutely what you say, Mr. Deputy Speaker. Suffice it to say that if we are to encourage the way to a more impressive level of savings and investment, tax reform is urgently desirable. I believe that to be the general opinion of the country. I have such great respect for my right hon. Friend the Chancellor of the Exchequer, who represents the next constituency to mine, that I hesitate to say any word in criticism of him, but I genuinely believe that there was great disappointment that this year's Budget missed a glorious opportunity to effect some of these necessary and highly desirable reforms.
The largest single obstacle to increased share ownership is, of course, the 2 per cent. ad valorem transfer duty. I think it right to summarise the reasons why something should be done about it. First, it is important to maintain the efficiency and liquidity of the market. Secondly, it is important to encourage overseas investment. All my experience leads me very clearly to the conclusion that this high rate of Stamp Duty, the highest in the world, acts as a definite bar against overseas investment on, for instance, the London Stock Exchange. We talk in general terms of London as the financial capital of the world, but—my word—it is gradually losing that position because of our taxation policy.
Third, it is necessary to facilitate the marketing of fixed-interest securities. In spite of what the hon. Member for Paddington, North said, the Motion refers not only to ordinary shares but to preference shares, debenture stock and, no doubt, also to deferred shares. It refers to the wider ownership of industrial shares.

Mr. Parkin: It does not. It refers to the
personal ownership of the industrial wealth of the country".
Most hon. Members have been talking about share ownership.

Mr. du Cann: I think it would be better if I went on with my speech.
The fact is that the 2 per cent. ad valorem duty unquestionably restricts the market in fixed-interest securities. Finally a reduction in the duty would help very much small investors in particular. On a small purchase, 2 per cent. ad valorem transfer duty is far too much to have to pay.
There are other points which have not been made to which I wish briefly to refer. There has been substantial and, I think, somewhat unjustified criticism in general of the Stock Exchange and of the whole apparatus of share transfers. I agree that it is unsatisfactory, but at this moment a Committee is sitting to examine ways in which the situation could be improved. Several very interesting suggestions have been made in this respect. The matter will be one very largely for legislation, I suppose, and I hope that my hon. Friend

will be able to tell us that, when the results and findings of the Committee are available, they will be studied very closely by the Government and, if it is possible to implement the Committee's recommendations, that will be done. It is quite true that the situation is unsatisfactory at present, but it is being considered and, when that consideration is completed, the next step will be for the Government.
Next, on the general subject of the 2 per cent. ad valorem duty, I have never understood why it should be the buyer of the stock who has to pay. Surely, it should be the seller. He is the fellow we want to discourage, not the buyer. Again, I commend that suggestion to the Government for examination in due time. There are many other things which, I believe, should be the subject of action by the Government. I have made a list of them and I will go through it now.
First, it is desirable that help should be given to company schemes for share ownership. At present, no practical help is given. Second, there is the desirability of helping thrift schemes, private or company, whichever they may be. Third, I think it would be appropriate if the comparatively recent obligation on building societies to pay Profits Tax were rescinded. Fourth—this point has been made before—the Government should implement the recommendations of the Gedge Committee and allow no par value shares. Such shares in American companies can be bought and sold in Britain without difficulty. Unit trust shares are, in effect, no par value shares. Why on earth we should prohibit them in companies I cannot imagine, unless the reason be that it is almost a point of honour in the House to settle controversy by setting up a committee and then, after its report is received, promptly pigeonholing its recommendations.
Fifth, there are the investment clubs about which I have already spoken. Their tax position is at the moment very uncertain. It is not certain whether individual members of investment clubs will be liable to tax on the profits of the clubs. This again is a matter which should be resolved and dealt with, as it readily could be. As regards the general machinery for transfers, my hon. Friend the Member for Liverpool, Wavertree


(Mr. Tilney), who has great experience in these matters, has suggested that franking machines should be permitted in brokers' offices. I hope that he would include unit trust managers' offices as well. There are tremendous delays at the Stamp Office, and, if my hon. Friend the Economic Secretary can find it convenient during the next few weeks, I hope that he will look into the matter. The fault lies not only with the Stock Exchange. If my hon. Friend could see the queues of people at the Stamp Office, he would realise that the Government also have something to answer for. It is not just a matter of having enough people to deal with a small amount of business. It is a matter of having enough people to deal with the larger number of daily transactions to which we have recently become accustomed.
Next, something ought to be done for the trustee savings banks. They have become totally the creature of the Treasury. In my view, they made a great mistake in surrendering control of their affairs to the Treasury, and I hope that in due time the Government will be generous and allow them to issue cheques and also provide facilities, over the counter if need be, for the purchase of industrial shares of one kind and another. I hope that the whole attitude of the Government toward the trustee savings banks will soon be under generous review.
Last in this long list, which could be made very much longer, I include certain unit trust matters which require investigation. We are having great difficulty with the Inland Revenue at the moment in regard to grouping. There is no reason why the recommendations which we are making should not be accepted, and I hope that my hon. Friend will be able to look at those matters. There is the tax on repurchased shares, to which the Leader of the Liberal Party was good enough to refer. It is not generally known that the managers are obliged to pay possibly two lots of 2 per cent. ad valorem duty on repurchased shares plus a further 10s. on the issue of the share certificate. That seems to be onerous and unnecessary, particularly if we are trying to encourage a free market in these shares.
One could speak for much longer about practical ways in which the Government could help, but I wish to con-

clude with certain general observations about their attitude in this matter. I thought that the hon. Member for Devon, North was perfectly fair when he twitted us on this side of the House quite hard about, in effect, not practising what we preach. I agree with him wholeheartedly. I go further and say that I admire very much the consistent if largely ineffectual efforts of the Liberal Party during the past few years to contribute new and practical thought in this matter. In my view, the lead that the Liberal Party has given is first-rate. I am only sorry that it has not been followed by the Government.
I must at once repudiate, of course, the inferences which the hon. Gentleman drew from the conversation he said he had with me in the train down to Taunton. If he had been willing to back me financially three years ago, before I started, I should have been very happy to accept that practical backing. The trouble which affected many of us who have been interested in this matter was that of obtaining practical backing. Indeed, there were many people, good friends of mine—city editors in particular—who said when I started that the movement would never survive and would fail within six months or so. All right. We have proved them wrong. That is very satisfactory.
We are now in a situation where the realities of the specific pledge which Sir Anthony Eden as Leader of the Conservative Party gave the electorate in 1955 come to be honoured. At present, the Government have honoured that pledge in two very minor respects only. The first is in the reduction in duty on bearer shares. I moved an Amendment to the Finance Bill about this last year, which was accepted by the Government. The second respect in which the pledge has been honoured is in regard to unit trusts, to which my hon. Friend the Member for Halifax (Mr. Maurice Macmillan) referred in his speech, to equate them with investment trusts from the tax point of view. I had the honour of leading a deputation to the Treasury on behalf of the movement.
Only those two things have been done, and in each of them a back bencher—in both cases myself—had to go, so to speak, on bended knee to the


Government to have something done. With respect, that is not good enough. I hope very much that one result of this debate today will be to encourage all of us on both sides who are interested in this matter and determined to see something done about it to do all we can to press the Government to honour the 1955 pledge. There is disappointment in this House and in the country as a whole that, as yet, the Government have not lived up to their promises in the matter. We hope for brighter things in future, and I am sure that we shall get them, but I hope that we may have an assurance from my hon. Friend today that we are likely to get them.

2.0 p.m.

Mr. George Darling: The hon. Member for Taunton (Mr. du Cann) has contributed a very practical note to our discussions. To attempt to follow all the points that he has put forward would make it difficult for us to produce the speeches that we have prepared for ourselves, but he gave us a great deal to think about, and I want to take up one or two of the points he made. I take, first, the hon. Member's reference to the need for closer public supervision of operations in the field with which we are concerned today. I also wish to refer to his references to some of the observations made by my hon. Friend the Member for Paddington, North (Mr. Parkin).
I do not think that the hon. Member for Taunton was seized of my hon. Friend's point. We are aware that in the case of a public company, in which a high proportion of the share capital is held by institutional investors, representatives are not normally sent to the shareholders' meetings and do not normally make representations to the company, because of their institutional character, and if the shareholdings of individual shareholders are so widespread that they cannot get together, and are not going to turn up, anyhow, effective control of the company will be left in the hands of the management. Many managements of large companies are now self-perpetuating oligarchies. Nobody can interfere with them.
We also have to face the situation that if small individual shareholdings become very widespread, especially in the case

of our large public corporations, it will be quite impossible to find a hall in which all the shareholders can be present. We know that firms like I.C.I. are very well run, and that their directors can be trusted to do nothing that they should not do, but the situation may well develop to a state where effective control of I.C.I. cannot be exercised by any body of shareholders if there is any need for intervention, such as a desire for a change of directors. That is the situation that my hon. Friend the Member for Paddington, North was trying to draw to the attention of the House, and it is a very serious one.
I add my congratulations to those which have been expressed to the hon. Member for Twickenham (Mr. Gresham Cooke) for giving us the chance of having a second bite at this cherry in the same week. The fact that it is the second bite has rather denuded the House, but it gives us an apportunity to elaborate some points that we were not able to make in the debates on the Finance Bill. As has been said, however, the hon. Member could hardly have chosen a more unfortunate day for this discussion, with the drop in Stock Exchange securities, and the rest.
When I read the Motion again this morning I saw that it asked the House to call upon Her Majesty's Government
to consider whether any action can be taken to remove obstacles which may deter the small saver from investing in industry …
I would have thought that one of the deterrents was the increase in the Bank Rate, and another was the jiggling about with the Government's fiscal policy generally. In those circumstances, I would construe the Motion as meaning that we should ask the Government to remove themselves, so that they will stop deterring small investors from investing in industry.
The hon. Member for Twickenham also said that what he has in mind in putting forward his proposals is to turn our workers from wage slaves into owners of industry. There are two aspects of this matter which we must consider. First, at What point does he think their shareholding will be sufficient for them to cease being dominated by the wage slave element—not that I think our workers are wage slaves, in that sense—and become dominated by the shareholding element? I can assure him


and other hon. Members, including those belonging to the Liberal Party, that it will take a century or two to bring about such a change.
The hon. Member for Devon, North (Mr. Thorpe) referred to the fact that 50 per cent. of our shareholdings are owned by 2 per cent. of the community. If the proposals put forward by the hon. Members for Twickenham, Taunton, and Devon, North were added together to become one big policy, I suggest that we would still have to wait at least a century for those proposals so to work themselves out that the status of the workers would be changed to such an extent that they would become the effective owners of industry. This is a matter of arithmetic, and anybody who cares to try to follow the charts of the changes in the shareholding of this country will appreciate that we must wait a long time before we get the change that the hon. Members want.
The hon. Member for Twickenham said that, on the average, a worker in industry has a machine worth £500 at his disposal. We must make it clear that only a minority of our workers are employed in manufacturing industries. I do not want to labour that point, but what will happen to one of these £500 machines if, because of the Government's credit squeeze, the product it makes is no longer desired by the market and the worker is thrown out of work and the machine not used? If we so arrange the shareholding of this country that that machine is his, in the situation that I have referred to the worker is not only out of work but has lost his savings. This is another way of saying that we must spread the risk.
I have a further criticism of the observations made by the hon. Member for Twickenham concerning wage standards. He said that we are now dealing with a wealthy man-in-the-street, or a more prosperous man-in-the-street. When observations are offered about the improvements in living standards it is customary to look at the Ministry of Labour's six-monthly table of earnings. I have been saying for years—at last with some effect—that those figures are misleading. The average that one ends up with is not really the national average at all. At the moment, it is said that

the national average for male workers is £13 per week, but that is quite a fictitious figure. What we really want to know is the number of workers in each grade of income.
I think that I can take some responsibility for a recent Ministry of Labour decision in this matter. I suggested it in an Adjournment debate about five years ago, and the Ministry of Labour has at last decided to conduct a pilot survey to discover what are the actual earnings in industry. I would guess that it will show that the majority of our workers are taking home not much more than £10 a week. That is far different from saying that the national average is £13. It may well be, but the majority of male workers will, I think, be taking home about £10 a week. So they do not have a great deal to spare to invest in industry if they are family men with homes, wives and children to look after.
Therefore, it will take us a long time to come to the kind of property-owning democracy which has been spoken of if we rely only upon the measures suggested by hon. Members opposite and by the Liberal Party. As my hon. Friend the Member for Paddington, North said, we should decide what our terms mean. When I talk about a property-owning democracy, I mean that the democracy should own the property, that the community should in some way own more property. As my hon. Friend also pointed out, we are getting into a situation where we want the community at least to own some of the property by taking upon itself the job of providing the risk capital for new developments.
We on this side agree with the proposition that the first £15 of some forms of savings should get tax relief. It is true that the proposal that we put down in Committee on the Finance Bill was for co-operative societies' capital, but in the course of the debate we made it clear that although we think that there is a special case for co-operative societies, for reasons developed on that occasion, we have no objection to making this concession more widespread. I am sorry that hon. Members opposite who agree with us did not join us in the Lobby. Their demand would have been more effectively made had they done so.
We are not opposed to workers investing in industrial shares if they wish to


do so, but we must point out the risks of having too many eggs in one basket. All of us would agree with the hon. Member for Taunton when he said that if, in present circumstances, we were called upon to give advice to a small investor with money to invest, we would advise him to put most of it into securities, savings certificates, or whatever they might be, which can be easily cashed in case of difficulty, then to think about trustee savings banks and industrial and provident societies—I agree about improving the conditions here—and then to consider putting his money into unit trusts rather than into an individual industry. That would be my advice. If, however, somebody wanted to go in for capital gains or something like that, my advice would be to try to pick a safe "blue chip" company.
I would offer that advice not because I like or want to support the present system of financing industry, but because it seems to be the best thing to do in present circumstances. All my savings are in co-operative societies, particularly the Co-operative Insurance Society, where they are absolutely safe and sound. If I might do some advertising, there are some good things going in co-operative development bonds at 5 per cent., which provide a good form of industrial investment.
I suggest that investment in industrial and provident societies would be the best way of achieving the object of the Motion. It expresses a desire for economic stability, political freedom and social justice. The investments in co-operative societies provide economic stability because the shares are not transferable. They are withdrawable and they must be paid back, unless the concern has gone completely bankrupt, which nowadays is more or less impossible, at the value at which they were issued.
Investments in co-operative societies provide political freedom because only in co-operative societies do all the members, whatever their shareholding, have an equal right to go to the meetings of their organisations and exercise their political freedom. Such investments provide social justice because everybody is treated in precisely the same way. I do not want to develop that point, but I hope that in discussions of this nature hon. Members opposite and the Liberal

Party will not forget that there are 12½ million industrial investors who are investing in this type of industrial enterprise. I hope that when the Jenkins Committee reports, it will have seized upon this point and will recommend alterations in company law in certain aspects and that some of the principles of the industrial and provident societies should be injected into it. I hope that we will have an opportunity of discussing that kind of thing on another occasion.
My next point, which has been mentioned by almost everybody who has participated in the debate, is that in present circumstances we have insufficient industrial investment. The hon. Member for Taunton became almost passionate about the insufficiency of industrial investment and we all agree with him. We have seen the comparative tables between this country and other countries. Those of us who represent industrial constituencies can see, if we have had any experience of industry, where the capital should be going in.
I represent the centre part of the City of Sheffield and I see something of the steel industry, but particularly of the smaller trades in that city. Many of the little cutlery firms are still working in old-fashioned premises that were out of date fifty years ago. There are other firms using machines and methods that are hopelessly out of date. They come to us and say that we must do something to get rid of Purchase Tax—I thoroughly agree; I object strongly to Purchase Tax—and that we must do all kinds of things to help them build up their trade. Their output and sales are declining.
The first thing that the cutlery industry should do is to help itself by bringing all its firms and its equipment up to a high, modern standard. I could go through lists of industries in which the equipment and the organisation are out of date. We all agree that there should be far more capital investment in industrial developments and modernisation. We will not get it, as my hon. Friend the Member for Paddington, North so clearly pointed out, by putting too much emphasis upon the small saver becoming the private investor in British industry. He is not the person to take risks. If he has any influence at all as a result of


becoming a shareholder, either collectively or individually, in the industries in which his money is invested, he will use it to make those industries conservative.
I therefore criticise the approach of giving the small investor an opportunity of investing in individual industries, for many reasons. One of them is that he would, perhaps, have an influence upon industry that would not be for the benefit of industry in so far as we want greater enterprise, greater capital investment, more initiative, and so on. He would become a rather restraining influence instead of pushing initiative forward.
For quite other reasons, however, there is still a need to give the worker a better stake in industry and to improve his status. This is where I have been quarrelling with the Liberal Party. I was rather kicked around when we discussed the matter on Wednesday, because either I was not making myself clear or the Liberal Party was not in a mood to understand what I was saying. If, as is implicit in the Motion, we are to give the workers a better status, we shall make a fatal mistake if we assume that the worker must change his status from being an employee before he can get a better share of control and management. As I said then, it is the fact that he is an employee which makes him belong to the firm. He has not necessarily to buy shares to become a member of the firm. Therefore, I think that the question of his status ought to be divorced completely from this idea of shareholding.
Although I would, perhaps, differ about the methods which might be suggested, I do agree—and I am sure my hon. Friends will support me in this—in wishing the workers to have more investment under their control in British industry in one way or another, but if that investment is to be effected let us treat it as investment: do not let us attach any other conditions or ideas to it. If we want to improve, as we on this side of the House, at least, do want to improve, the status of the workers in industry, that is an operation in itself. It has got nothing to do with the worker's shareholding, and it ought not to have anything to do with the worker's shareholding. We disagree strongly with

the idea that he has to buy his shareholding in the company in which he works. He belongs through his work, his skill and enterprise which he contributes, and if they are misused in any way, it is not his fault. That is because of inefficient management.
The best way to build up partnership in British industry is to treat the matter on those lines but, of course, there are other sound reasons for suggesting that the worker's investment in industry should be a collective investment rather than investment in an individual firm. For one thing—and this is an important point which is often overlooked, particularly by the Liberal Party—not all manufacturing industries, by their nature, not necessarily by the quality of their management, are equally profitable.
Generally speaking, a company or an industry with a more or less inelastic demand for its products and low labour costs in the final price of its products is profitable and can spread shareholdings among its workers and offer them a good return and with a great deal of security. That applies to Imperial Chemical Industries. But one will find other firms with high labour costs and not such secure markets which cannot produce anything like the same profit-sharing schemes.
The hon. Member for Twickenham mentioned the unfortunate experience of United Steel Companies, which went in for profit sharing and shareholding schemes for their employees in the interwar years, when we ended up, as he knows, in Sheffield with 70,000 unemployed. In Sheffield, many of the United Steel Companies' workers not only lost their employment, but lost their savings, too. We do not want that kind of thing to occur again. I am very glad indeed to say that the profitability, so to speak, of the United Steel Companies is not going these days into shareholding schemes, but is going in a pretty big way into fringe benefits of several kinds, particularly pension schemes.
It may be worth while for a moment or two, since it bears out many of my arguments, to consider this. They have produced, curiously enough—curiously in the sense that it strengthens my argument about raising the status of the


worker without his becoming a shareholder—in a report presented to the employees, as they do every year, as, also, they arrange for the employees to raise any questions they like, through their representatives, about the way the management is setting about its work—a report which shows that of the total sales of the United Steel Companies about 50 per cent. has been taken up by raw materials and capital equipment and about 20 per cent. by wages and salaries.
In other words, labour costs are low. Investment, taxation, National Insurance, dividends, come to about 25 per cent. The figure which is going into pension schemes, fringe benefits, and so on, is 5 per cent. The cost of these schemes in this firm runs at about 1s. in the £. I am sure that the management of United Steels would say that they get the whole 1s. back because they do have good labour relations, and they have support for new methods of production, and so on, and the greater productivity which comes out of those better standards does pay more than 1s. in the £ which the fringe benefits cost.
But try to apply this to the coal mining industry, where labour casts are not 20 per cent. of the total value of the product but about 63 per cent., and we should find that it would take more than 1s. in the £, or 5 per cent.; the cost of the fringe benefits would be nearly 20 per cent. This is simply a matter of arithmetic: three times five and a little more; round about 17, 18 or 19 per cent. Obviously, the coal industry, if it went into the job of providing fringe benefits in this way, would have greatly to increase the price of coal—which is what has happened. There is no other way of doing it because it cannot recover expenditure like that, on such high labour costs, with any expansion of its productivity in any reasonable space of time.
Therefore, if it is the hon. Member's intention to allow the workers to share fairly in the proceeds of industrial development there is a strong case for spreading the investment over as wide an area of industry as possible so that the workers can get an average return, rather than be tied to industry of low profitability while others are tied to industry with high profitability.
The final point I want to make is to come again to the question of managerial

control. There is a real, serious problem here, and when we are twitted, as we have been twitted today, with the fact that we on this side of the House do not want to reform capitalism, or to make capitalism any better than it is, it seems to me to be missing the point, because in a mixed economy—and we realise that with the Socialist developments which we want we shall have a mixed economy still for some time—there will be a need to inject what I would call more and more doses of Socialism to make the economy work and to make capitalism work.
Although the hon. Member for Taunton may disagree with me, I would describe some of the proposals which he himself made as having at least a Socialist tinge to them. For instance, to come back to the point I made at the beginning, he has suggested a greater degree of Government or public supervision over some of the activities in this field. I agree. The standards of conduct have to be laid down by the Government. The Government have got to see that those standards of conduct are enforced, or, rather, that those who offend against those standards are dealt with.
That is a form of Government control and supervision which we greatly welcome. We want more of it, but I think that it has to be taken a stage further, for the reason I gave earlier, that as we spread the shareholding among individuals, as we increase the proportion of shares held in any corporation by institutional investors, the need for public supervision of those institutions becomes greater, because the supervision cannot be exercised, except indirectly perhaps, through the managers of the institutions which have done the investing.
The supervision cannot be exercised by the shareholders who have spread themselves so widely. As the hon. Member himself said, they themselves are not experts; they need expert advice; and if they are not experts we cannot expect them to exercise adequate control of the giant corporations whose activities are strange to them. I cannot see—I disagree, I think, with the hon. Member here—the unit trust management committee, however good it may be, exercising these functions to the extent that the management committee


can supervise the activities of all the industries in which the unit trust has shareholdings. I think that it is impossible; and if we reach that situation, I am confident that we shall have to have more and more public investment in industry.
My hon. Friend the Member for Coventry, North (Mr. Edelman) said that he disagreed with the Labour Party's view that has been put forward in "Industry and Society" that public investment should not be associated with public control in private industry. I agree with "Industry and Society", because I think that the supervision of the activities of industry—control, if we like, but I should prefer to use the word supervision—has to be exercised whether there is any public investment or not, for the reasons which I have tried to develop. If the management is getting out of control, to bring it back into control it is the public that has to exercise that control.
Therefore, I would not tie up public investment with the question of public control, but we have to face the situation, as has been repeatedly said from this side of the House, that there must be some public control of private industry, and there must inevitably be some public investment in what are now private industries. There must be an opportunity given by tax reliefs and the other measures suggested today for the ordinary individual to have a bigger share, in our view through collective, rather than individual, investment in the industries and trading institutions of the country.
Above all, we must insist that the status of the worker, and the place that he should occupy in relation to the management, and as part of the management of the concern in which he works, should not be related to the idea that he has to buy his interest in the firm before his status is raised and he is given the opportunity to play his part in the management.
With those words, and although I have spoken for longer than I intended to do, I wish again to thank the hon. Member for Twickenham for giving us the opportunity, at least in my case, to develop some of the views which I was prevented by lack of time from developing during

the course of our discussions on the Finance Bill.

2.32 p.m.

The Economic Secretary to the Treasury (Mr. Anthony Barber): I hope the House will think it convenient if I intervene in the debate at this stage. My hon. Friend the Member for Twickenham (Mr. Gresham Cooke) said that it had taken him five and a half years to succeed in the Ballot for Private Members' Motions, and I certainly join in what the hon. Member for Sheffield, Hillsborough (Mr. Darling) said in congratulating my hon. Friend on the selection of what, I think, is a most fascinating topic for discussion—the wider ownership of industrial shares, which concerns an aspect of our life which is clearly, from what has been said, of growing importance and great significance, both socially and industrially.
My hon. Friend the Member for Halifax (Mr. Maurice Macmillan) thoughtfully referred to the fact that I had had what he thought was a heavy Parliamentary week, so perhaps I may be forgiven for starting on a personal note. Before I came to the Treasury, my hon. Friend the Member for Halifax sent me a proof copy of the booklet, "The Growing Popularity of Share Ownership", which was published by his Committee. Whatever views one may have on this matter, anyone who reads it will agree that it provides a most excellent analysis of the existing facilities available to the small investor and of the problems which are involved.
I realise that there is a deep division of opinion among hon. Members concerning the ownership of property. My hon. Friend the Member for Twickenham and some of my colleagues on this side of the House have advocated the wider spread of the ownership of shares. The hon. Member for Coventry, North (Mr. Edelman), on the other hand, presumably with the agreement at any rate of some of his hon. Friends on the Labour benches, advocated more nationalisation. I would be less than frank if I did not declare at the outset my own belief that the future wellbeing of our people, both economic and social, lies in a wider sharing of personal ownership of property of all kinds.
It is worth while examining for a few moments the history of savings by the


small man in recent times. Direct investment by the small saver in the means of production is, of course, by no means new. Before the Industrial Revolution, the artisan who was able to save, in so far as he could, invested his savings largely in his own efforts through the purchase of more and better tools of his trade. With the advent of the Industrial Revolution and the vast changes which it brought about, the automatic link between thrift and industrial investment, which was the natural result of ownership of the means of production, was for many people broken. In those dark days of the Industrial Revolution, there was not much chance for the ordinary wage earner to save, but such savings as could be made were diverted into less hazardous forms of small savings—the various kinds of small saving that we know so well today, the savings banks, building societies, industrial and provident societies, and so on.
In the context of this Motion, the significant characteristic of these forms of saving was not only that they were less hazardous, but that they did not represent a direct stake, either in the saver's own industry or in industry at large. There was nothing wrong with these new forms of saving. Indeed, they fulfilled a need which might well otherwise not have been fulfilled at all. In more recent times, the incentives open to small savers to invest, directly or indirectly, in industry have again begun to return, and in the last few years very rapid strides have been made.
With the change of social habits, these means of investment have become more varied and more sophisticated. The point of what I have just been saying is to underline that there is nothing unnatural about a man investing his savings in industry. Indeed, the change in savings habits which we are now witnessing is just what one would expect. Both socially and economically, it is surely a good thing that those who can save should be encouraged to have a stake, however modest in its beginning, in the total production of which they are a part.
My hon. Friend the Member for Twickenham put it graphically when he said that his answer to Communism was this. The workers of the West should become, not wage slaves, but

owners. It is not simply that this investment of the fruits of their own efforts should be a means of stimulating further the growth of the industry of all. There is another aspect, equally important, indeed perhaps more important, which was referred to by my hon. Friend in his opening speech. Investment in industry by those with small incomes also serves to break down those barriers of class, outdated as they are, but which at least to some extent still exist, between capital and labour. Wider investment in industry is also bound to promote greater understanding of the identity of interest of all those who are involved in our free enterprise system. Whether one believes in free enterprise or not, what I have said will be accepted by all, and as long as we do operate in this country a free enterprise system, nobody will deny that these consequences are beneficial.
If I may adopt some words of my hon. Friend the Member for Wokingham (Mr. van Straubenzee), we do not want any longer to hear talk of "us" and "they" but of "we." Wider share ownership will, in its turn, lead to a widening of the ownership of all kinds of property, and will, of course, benefit the economy generally by increasing in the long run the volume and the habit of saving. In view of what I have said, the House will not be surprised to hear me say that I welcome this Motion.
This is, I think, a good occasion on which to take stock of the position we have now reached in what may turn out to be an evolution in investment habits. I asked those who advise me if they could find out how widely share ownership is spread today. Unfortunately, such information is far from complete but it is a fact that in many public companies, and in particular in the larger ones, shareholding is already very widely spread. The average shareholdings can be expressed in hundreds of pounds rather than thousands, and such evidence as there is seems to show that there is a trend towards a lessening of the concentration of shareholding in a few hands.
As I have said, information is far from complete, but the indications are certainly that the movement at the moment is towards greater shareholding by institutional investors on the one hand,


which of course themselves often represent small investors, and on the other hand towards quite small holdings. I think that this is a correct assessment, but I only wish that more factual information was available.
There can be no doubt, however, that even in the last year or two the interest in wider ownership has quickened. There is no other conclusion to be drawn from the fact that since about the middle of 1958 the number of unit trusts authorised by the Board of Trade has increased by seven to fifty three, and the market value of funds invested in unit trusts has increased from £60 million to about £200 million, which is a remarkable stride forward. Various instalment facilities have been offered by unit trusts and other organisations for the purchase of units or of shares. New schemes for employee shareholding have been announced by industry and the investment club movement is still growing.
Obviously, the Motion must be considered against a background of increasingly widespread ownership of industrial shares, but I think that my hon. Friends would agree that there is as yet no clear indication that the really small saver has made a substantial appearance on the scene of industrial shareholding. On the other hand, we are not facing a situation in which investment in industrial shares by the small saver is flagging, and any measures which ought to be taken should be directed at increasing the expansion of what is already an expanding movement.
The Motion refers to the need to encourage the small investors. Again my hon. Friend the Member for Taunton (Mr. du Cann) gave some striking figures of the increased number of shareholders in the United States. But I think my hon. Friend will agree with me that the American attitude, at least until now, has been very different from that which prevails in this country, not merely because of the difference in average income between the two countries, but because of the different psychological outlook or attitude of the American people of all classes towards private industrial concerns and towards their function in the development of the economy.
The motive of the American worker in acquiring a stake in the economy in this

way is for this reason different from the desire simply to accumulate saving in order to provide personal security. My own constituency is predominantly industrial, and I am quite sure that the attitude of the average wage earner in this country to private industrial concerns is changing and changing rapidly. But taking the conditions as they are today, what should be done now? The first question to consider is what in present circumstances might be the effect both socially and economically of a massive campaign to give incentive to the small saver to invest in industry.
Would it succeed, and if it did, where would the money come from? Is it the case that the bulk of the population have surplus money from their weekly pay-packets waiting to be invested in industrial shares? If not, the money would have to come from current consumption or other forms of saving. It is an open question whether in present circumstances any campaign to cause substantial money to flow voluntarily from current consumption would be successful.
What about the diversion of money from other forms of saving? After the needs of daily life have been satisfied and provision has been made for commitments and old age, it is a natural instinct to save. I do not think that anybody who has spoken in the debate would dispute that from a social point of view it is highly desirable that the first line of defence of a family's savings should be in a form where there is no risk of capital loss, and, what is perhaps more important, in a form in which the money would be available at short notice.
Several hon. Members have made this point, and it is interesting and significant that both my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney), who is a stockbroker, referred to the risk involved in investments in shareholding and my hon. Friend the Member for Taunton, a unit trust manager, also spoke about the dangers. It is because the average family should have this first line of defence that the various forms of national savings are so popular among small savers. They offer the security of a State guarantee together with facilities for repayment on demand or at very short notice. The building societies have been mentioned and other


institutions which offer the same sort of attractions.
Beyond that first line of defence I think many people would feel that in most cases the prudent man would be likely to devote a part of his savings to buying his house. I say "in most cases", because obviously circumstances vary. But the development of home ownership seems to me to be desirable on both social and economic grounds. After that, I doubt whether anyone would suggest that it would be wrong in principle for a man to invest a part of his savings in some form of investment which offered the possibility of a higher rate of return in exchange for a rather greater element of risk. But, of course, one has to consider the possible economic effects as well as the social aspects of this.
In so far as investment of saving represents a deferment of expenditure, the precise form which it takes may be of secondary importance from the economic point of view. If money is invested in industry by saving that much more and spending that much less, that is all to the good, but, as my hon. Friend the Member for Halifax pointed out, what is required is new savings. In the long run it may well be that that is what will happen. On the other hand, any sudden growth of investment in industry which took place at the expense of lending to the Government through national savings securities might well prove detrimental to our economic stability. As my right hon. Friend the Chancellor of the Exchequer made clear in his Budget statement, the inflow of personal savings to the Exchequer is of great benefit to our economy.
As my hon. Friends the Members for Twickenham, Halifax and Taunton pointed out, we have a great duty also to help the less developed countries. During the past years the amount of direct Government help has increased very greatly and, therefore, it is for these reasons and for reasons of domestic economy very necessary that a considerable amount of personal savings should be channelled directly into the Exchequer. I should be less than frank with the House if I did not mention that the Government have to keep an eye on the extent to which, at any rate in the short term, additional investment in industry by the small saver on a substantial scale

—and I repeat "on a substantial scale"—might take place at the expense of the traditional channels of small savings.
But with that qualification, I can assure the House that the Government are far from opposing the encouragement of wider shareholding. On the contrary, it seems to me to be abundantly clear that the wider ownership of industrial shares is likely, inevitably, to accompany the increase in the national wealth, and will do so to the great benefit of the British people and of our way of life. Indeed, it is already happening.
Several of my hon. Friends have referred to the increased interest in industrial shares. The man in the street is becoming interested. The public are being better informed. I am sure that this is right. But I still think that one of the most fruitful fields of endeavour is that of education and propaganda, and this is something which must come from private enterprise itself, just as it has done in the United States of America. In the main, as I think all hon. Members will agree, this is not an activity which is appropriate for the Government, nor, indeed, one to which the ordinary organs of Government are particularly suited.
What is required is that something should be done to ensure that the supply of information is increased by which investors can familiarise themselves with the principles and the possibilities of share-holding. Anyone in the House who casts his mind back to the day when he made his first modest investment will remember that it did not seem to be a very simple operation. My hon. Friend the Member for Twickenham appealed to the Stock Exchange on this subject, and I am sure that the House was interested to hear the observations of my hon. Friend the Member for Wavertree, with his practical experience in these matters. There is no doubt that a simplification of the means of buying and selling shares, compatible with security, would help everyone.
As some hon. Members know, the London Stock Exchange has recently taken the initiative in instituting an inquiry into this question. I understand that the Chairman of the Stock Exchange convened a meeting in November of representatives of the Bank of England, the Clearing Banks, the Chartered Institute of Secretaries, the


Issuing Houses Association and the Accepting Houses Committee. At that meeting an Advisory Committee was appointed consisting of officials of the various organisations which were represented.
The House will be pleased to know that a further meeting of the parent committee is likely to take place shortly, and it is hoped that an announcement about the Committee's recommendations may be made in the near future. I can assure my hon. Friend the Member for Taunton that we will certain study those recommendations with great interest and sympathy as soon as we have them. My hon. Friend the Member for Twickenham said that he 'hoped that the Stock Exchange would approach the Jenkins Committee. I understand that the Stock Exchange intends to submit evidence to the Jenkins Committee, but I do not know on what topic that will be.
Reference has been made to co-partnership and co-ownership. Some progressive firms already practise these principles. They offer to their employees, as a bonus, or on advantageous terms, shares in their own companies. For various reasons which I will not go into now, it is accepted, I think, that industrial relations are not everywhere conducive to a widespread introduction of such schemes at present. There is a further point which should not be ignored; there is some disadvantage to the small man in having too large a stake in one firm, especially his own firm. Several hon. Members have mentioned this, and it is a valid point. On the other hand, there is no doubt that such schemes are a part of good industrial relations, the breaking down of barriers and prejudices and the building up of understanding of the vital economic processes which are the main spring of the private enterprise system.
If it is in the Government's power to take any reasonable steps to remove obstacles from the path of the small investor, it is certainly in keeping with our policy that we should do so. But the 64,000 dollar question is, what constitutes a reasonable step in present circumstances? There were a number of new Clauses proposed for the Finance Bill the object of which was to stimu-

late investment in industry by the removal or reduction of the incidence of revenue duty or Income Tax on small investments. We discussed some of them on Wednesday and I will not go over the arguments again.
My hon. Friend the Member for Taunton came back to the question of the restriction of relief from Income Tax on the first £15 of income to the Post Office Savings Bank and the ordinary departments of a Trustee Savings Bank. I went into this matter in considerable length on Wednesday, and I will not go over it again now, but if my hon. Friend were not in Committee on Wednesday, I ask him to consider very carefully the two reasons for the introduction of this scheme and for limiting it to these two bodies. They were mentioned by my right hon. Friend the Prime Minister, as Chancellor of the Exchequer, in 1956, and they are still valid today. There were special reasons for that which do not apply to the other institutions which my hon. Friend mentioned.
I was very interested to hear the hon. Member for Sheffield, Hillsborough come out quite clearly—I do not know whether this is a pledge for the next Election—with the statement that his party fully supported the relief from Income Tax of the first £15 of all investment income. That is a good step forward.

Mr. Darling: I thought I made it clear that that was a personal view.

Mr. van Straubenzee: The hon. Member is on the Opposition Front Bench.

Mr. Darling: This arose from the proposition which we have put forward about co-operative societies. If it cannot be accepted for co-operative societies alone, then obviously we must look at it in this wider aspect.

Mr. Barber: I am grateful for that clarification.
I have referred to the discussions on the Finance Bill and I will merely remind the House briefly that, quite apart from the question of principle, the cost to the Exchequer of the measures proposed makes them impracticable at the present time. I am, however, pleased that my right hon. Friend found it possible in this year's Finance Bill to meet the


wishes of the unit trust movement by providing that unit trusts should be treated like investment trust companies for the purposes of taxation.
My hon. Friend the Member for Taunton went very quickly over a great many matters, and I am sure that he does not expect me to deal with them all this afternoon. I will certainly look into his criticisms of the Stamp Office, which were also made by my hon. Friend the Member for Wavertree. My hon. Friend the Member for Taunton also referred to the Trustee Savings Banks and implied that the Government had not been forthcoming, in particular, over their desire to operate a cheque scheme. I have seen the representatives of the Trustee Savings Banks about this matter. While our discussions were confidential, I think there is no harm in my saying that there are certain very important, indeed fundamental, aspects of any such scheme which are not the concern of the Government and which have to be settled in other ways. He also referred to the taxation disadvantages of matrimony. Perhaps we can have a word about that later.
Because some of the new Clauses put down for Committee of the Finance Bill were not selected, there were other proposals of a fiscal nature which have been discussed today for the first time. I am sure that my right hon. Friend the Chancellor wants to consider these proposals and also the arguments which have been adduced in their favour.
I read the other day a criticism of this Motion in an organ of the Liberal Press, the purport of which was that it was not tough enough or specific enough, and that criticism was faithfully repeated by the hon. Member for Devon, North (Mr. Thorpe), whom we are very pleased to have with us. I hope that my hon. Friends whose names appear on the Order Paper will not think me presumptuous if I say that there are two ways in Which back benchers can set about such an occasion. They can either set out to hit the headlines, without hoping to achieve very much, or they can proceed with a sense of responsibility. Those responsible for this Motion have chosen the latter course.
I end by saying that the members of the Wider Share Ownership Committee have set themselves a task of

immense scope and importance, but the stream is with them and anyone who does not applaud their aims is not facing the realities of the twentieth century. I believe that the time is not far distant when the average wage earner will no longer be deterred by the apparent difficulties of investment. Wider industrial share ownership is already a reality. In the years ahead it will gain momentum and this country will be the better for it.

3.1 p.m.

Mr. W. R. van Straubenzee: All back benchers who have been taking an interest in this subject are grateful to my hon. Friend the Economic Secretary, first, for his courtesy in being with us throughout the entire debate, and, secondly, for replying so fully. I say this in spite of the distraction which, at the moment, he is doubtless undergoing, namely, a discussion about matrimony and its effects on taxation. I hope that I shall not appear discourteous to him if I say that I did not detect in his speech quite as full-blooded a response and welcome to the motive behind this Motion as I would have wished.
It is the function of back bench Members like myself, who have this interest at heart, to go on pushing it. It may well be that the stream is in our favour, but I am not so satisfied that the Government are so strongly in our favour as I think they should be. There has been very wide discussion on many matters and I know that there are other Members hoping to catch your eye, Mr. Speaker. I shall, therefore, be brief.
I personally believe that in a number of our discussions today we have missed the largest practical difficulty. I do not consider that we can get in one fell swoop from the really small saver to the shareholders. In that respect, however, it seems to me that the Government have made a move. As I started by being critical, it is only fair to make that point for it has been wholly overlooked so far both in the interesting speech of the hon. Member for Devon, North (Mr. Thorpe)—who has, regrettably, had to leave us for a moment—and also in the criticisms of my hon. Friend the Member for Taunton (Mr. du Cann).
When certain hon. Friends of mine and I set to work outside the House on


a study which eventuated in the booklet to which the hon. Member for Devon, North was good enough to refer, we came clearly to the conclusion that the first essential, preliminary step must be to encourage a larger number of bank accounts. We could not move straight from the kind of society in which a man was paid in cash, laid it on the kitchen table on Friday, allocated it with the "missus" and put so much aside for hire purchase and for other things, into a wider, shareholding, property-owning democracy.
There was at that stage the legal difficulty. I can think of few Members who welcome more than I do the Payment of Wages Bill, which is shortly to become an Act. It removes an historical anachronism which was doubtless wise in the period of the 1830s in which it was imposed, but which is wholly out of sympathy with modern times. I suggest—and I shall suggest to my hon. Friend the Member for Taunton when I see him—that my hon. Friend is being less than fair to the Government and that this first preliminary stage has been expeditiously dealt with, although it may have taken a certain pressure from back benchers on this side of the House. A great spread of bank accounts will make a material social changes in the country. Incidentally, it may raise grave problems for the banking industry, but that is wide of our present discussion.
In common with others who are interested in this matter, I have two principal reasons for wanting to see the greater spread of share ownership. My first—and, clearly, I would not sit on these benches if it were otherwise—is that I believe in the capitalist system; but, also, I want a far greater identity between the vast majority of people working in industry and the comparatively small number who have invested cash as opposed to skill.
For instance, I want many more people to feel the same sense of intense irritation which I, as a very modest shareholder in Cammell Laird, have to undergo when I find grown men arguing pitifully week after week as to who shall bore holes in what. That is finally reflected in my company's results as they appear on my breakfast table—and I repeat that I have a very modest invest-

ment—and are shown in the sharp reduction in the profitability of that company. This is not an "us and they" process. It is a "we" process. It has affected every man working in Cammell Laird, but I suggest that if we had a more vigorous labour leadership of the Ernest Bevin type it would not have gone on for so long; but I cannot explore that now.
There will be a greater understanding of the way in which we are all involved in these matters if more and more people are personally concerned in the profitability or otherwise of British industry. I say "or otherwise" because there was a cynical laugh when we began our debate at the fact that my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) should have chosen a singularly inauspicious day for this discussion. I do not find that so. I have never sought to cushion the small investor any more than the big investor against occasional loss. The fact that there are losses as well as profits on the Stock Exchange is one of the things which may lead to more and more good coming from wider share ownership.
Those of us who, last year, worked on this problem, under the chairmanship of my right hon. Friend the Member for Blackpool, North (Sir T. Low), whose absence from the debate I regret, but which I am sure is for a very substantial reason, came to the conclusion not only that the first essential step was a much greater number of bank accounts, but, also, that it was not practical to go from small savings straight to stocks and shares under our present system.
I am talking about the 5s.-a-week man and not about what is called "small" on the Stock Exchange. "Small" on the Stock Exchange means a £200 deal. There is a wealth of difference between the sort of man of whom I am speaking and the man whom the vast majority of hon. Members have in mind, and someone able to make a £200 deal on the Stock Exchange. That is a system which simply cannot cope with the man who saves 5s. a week.
There are 23 stock exchanges in the big provincial towns, but only 23, and I understand that there are provincial brokers operating in 150 small towns. That is wider than just London, but still completely removed from the sort


of man I have in mind. In the foreseeable future, we shall not get that sort of man to consult a stockbroker and go through all the business of investing his very modest savings in that sort of way. We must find a halfway house.
My hon. Friend the Member for Taunton thinks that he has found it. I do not in any way under-estimate the great contribution which the unit trust principle has made to the wider spread of share ownership. But I think that it suffers from this defect. Surely the Treasury, under any Government, cannot single it out for special treatment for tax purposes as a special method of saving. The key to the small saver lies in the sphere of tax. We do it in respect of certain types of saving already. We must grasp the lesson and extend it to another sphere of saving, but the difficulty which then presents itself is to which of so many spheres it should be extended.
Since we cannot apply special tax advantages from a saving point of view to unit trusts, we must evolve a new system. I do not want to bore hon. Members, but if those who have followed the debate are interested they will find an ingenious scheme which is sound in tax law set out in this pamphlet "Every Man a Capitalist," which introduces the industrial investment certificate idea. The essence of it is that any institution, whether it be bank, unit trust or insurance company, can set up a fund with certain basic rules of operation which would itself qualify for the industrial investment certificate and which, backed by Treasury action, would enjoy certain tax advantages. It would in fact be free of tax.
For that reason, its holding would have to be limited, in the same way as we exempt from tax National Savings certificates but, rightly, do not allow people to hold more than a maximum number. In that way we get at the small, not large, saver and we allow a very wide group of people to participate, if they wish, in the advantages of a tax reduction. The advantage of this scheme is that it spreads the risk and gives all the advantages of skilled investment management as in a unit trust. It gives a measure of choice to the investor. There is ease of distribution and it gives tax

relief to the small saver and channels Government aid in that direction.
I believe that perhaps not this exact scheme, although much care and thought went into it, but a scheme of this kind is the half-way house. As I have said, we must find a method of moving from the "five bob" a week man to the holder of stocks and shares. Hon. Members may say, "But this scheme does not produce the holder of stocks and shares" I accept that. I listened with much interest to what the hon. Member for Paddington, North (Mr. Parkin) said in criticism of unit trusts, namely, that they do not give a person a personal stake in individual companies. That is a perfectly fair criticism. I put it forward only as a first stage and as a bridge between our present set-up and the one which we all want to see.
If I develop my theme no more, it is out of consideration, first, for the House and, secondly, in the hope that other hon. Members with valuable contributions to make may have the chance of making them.

Mr. Grimond: I am very much interested in what the hon. Member is saying and in his scheme. I wonder whether, briefly, he could give us some idea of cost. Surely this is one of the great difficulties of the small saver. As the hon. Member knows, today it is expensive to keep a bank account. It is expensive to cash a cheque even before one begins to invest. The expenses of investing are heavy. Can he indicate whether his scheme will get over any of these expenses?

Mr. van Straubenzee: The hon. Member has made a very fair point, but surely, in essence, this is a tax matter. For instance, the 2 per cent. Stamp Duty is of overwhelming importance to the individual small purchaser. Therefore, this is a tax matter, which is why our scheme was directed to the small saver in particular. There are certain technical disadvantages, or there were then, from which the unit trust suffered, but which have been put right since the production of this scheme and that in turn adds to the efficacy of such a scheme.
I think that any essential management expenses of existing unit trusts are not regarded as being an exceptionally high


proportion of the whole—here we ought to have the advantage of the experience of my hon. Friend the Member for Taunton on this technical point—and to that extent I claim that expenses, so far as they are an appreciable part of the whole, are placed there by Treasury action, or lack of it, rather than by a pure matter of management.
The point about the expenses of a bank account is perfectly fair, but I think it equally fair to reply that the five big banks are studying this matter most urgently at present. As astute businessmen the bankers appreciate that a wide extension of bank accounts would be of great benefit to them and they realise that Parliament will shortly give them the wherewithal to achieve that. They are equally well aware of the item for charges which appears on the bank statements every six months, so that I think we may see some interesting schemes from that point of view.
I am quite unrepentant in my enthusiasm for this scheme and for a wide extension of it. No criticism voiced today has moved me from that point of view and I hope that among the ways in which pressure is brought to bear on the Government, this most helpful and useful Motion of my hon. Friend the Member for Twickenham will be one.

3.16 p.m.

Mr. T. L. Iremonger: I should like to refer, at the beginning of what I have to say to the House, to the stimulating speech of the hon. Member for Paddington, North (Mr. Parkin). Although it may be that the hon. Member came up somewhat muddier he did go deep in his examination of the Motion. I was particularly interested in what he said and the way in which one of the points he made was followed up by my hon. Friend the Member for Taunton (Mr. du Cann) in his authoritative and, I thought, most inspiring speech.
The point on which they were in conflict struck a spark which had been kindling my mind and which, indeed, prompted me to try to make a brief contribution to this debate. I had in mind to invite the House to consider share ownership in the light of the national economy as a whole, with special reference to the words about

economic stability in the Motion; and to invite the House, in that context, to ask to what extent share ownership is positively beneficial, leaving aside for the time being the important social and political considerations and looking at this primarily from a strictly economic point of view.
I am quite sure that the House, in doing so, will not be deluded into making exaggerated or indiscriminate claims, because a little precision of analysis is here called for. Here we are concerned fundamentally with the expansion of the economy, and expansion requires real investment, that is to say, the creation of more productive equipment. Real investment requires finance which, in turn, involves the loan of or the creation of money. It involves the creation of purchasing power and a demand for goods and services, and hence it involves inflation; unless in some way an equivalent amount of purchasing power is actually withdrawn from the economy until such time as the investment bears fruit in increased goods available for consumption. So we are face to face once more with our old friend, the danger of inflation in an expanding economy.
As we are considering share ownership, and as wider share ownership is associated in our minds with savings—and from the personal point of view of individual savers who buy shares, they are savings—and as the matching of investment and the incidental creation of purchasing power by savings and the incidental diminution of purchasing power is the classical concept invoked, there is a danger—of which the House will be well aware—that in promoting the wider ownership of shares we are ipso facto advocating an anti-inflationary panacea. But we are not necessarily doing that at all. I would invite the House to examine three types of the financing of expansion and to note in each case exactly what is the effect on the national economy. The first type is this—and I know that the House will be patient with me if I oversimplify the matter somewhat. It is the case of the company which borrows from the bank to build a new factory and thereby creates, or, rather, has created for it, extra money, which, in turn, creates extra purchasing power and extra demand. In this case the demand will not, until the


factory is in full production, be matched by the supply of goods produced.
Admittedly, the price of the shares will rise on the Stock Exchange, because people will look behind the shares to see the real assets represented by the shares in the company. But for every share that is bought at the raised price, that share is sold at the same price. Therefore, the purchasing power will remain in the economy. In such circumstances, the wider ownership of shares will not of itself mitigate the inflationary effect of real investment unmatched by saving. Buying shares in these circumstances does not effect any real saving throughout the economy as a whole.
Secondly, a company raises its prices, or refrains from lowering its prices, and thereby increases its profits. Then it ploughs its profits back and by that means finances the building of its new factory from its own resources. Certainly, in this case the effect is not inflationary. What happens is that the shares go up in value and in price. New share-owners buy the shares. I know that I am oversimplifying, but I think that the process is soundly analysed if I allow myself to say that the new shareowners buy the more expensive shares with the money paid to them by the company for building the factory. The old share-owners sell some of their shares to pay the increased price of the goods produced by the company. Whatever may be said of this process, it is not inflationary. One thing should be said against it, however, In so far as it does not lower prices, or even increases prices, it is bad for our balance of payments, because prices have an extremely important bearing on our exports.
The third type of financing, which, I think, is the most important, and to which I want to draw particular attention, is when a company raises its money direct from the public by a new issue of shares. If it does this, it avoids the inflationary tendency of bank finance, it avoids the bad effect on the balance of payments caused by a price policy dictated by considerations of self-financing, and it thereby enables savings to perform their proper function of matching investment within the economy.
There are many in the House today with experience of finance, and, as

financiers, they have a proper and inevitable interest in share holding. But, as Members of the House, they have a wider interest in the economy as a whole, and I think that it would be good if they would bring their minds to bear on the question of how wider share ownership can possibly have an unfavourable effect either on inflation at home or on our balance of payments abroad unless it is associated with a procedure for raising finance by companies through the issue of new shares on the market.
Why is it, one might ask, that more companies do not break through the plate glass window that is now between them and the public and raise their finance and their capital direct on the market from the public? One might say, of course, that if one raised capital from the public direct, instead of financing it oneself, one would have to pay interest to one's shareholders, but I am not sure that, if one worked it out, one would not find that one would save more by not having to pay Profits Tax on the profits which one would be forgoing through not holding one's prices at such a high level. I would ask why it is that some companies do not follow this policy more and give the public incidentally the benefit of reduced prices. Perhaps some of my hon. Friends will turn their minds to that and, at a suitable time, enlighten the House. It is an aspect of this subject which requires responsible consideration.
If one asks for tax privileges—I should not be in order now in pursuing taxation questions in very precise detail—might it not be better to concede any tax privileges that might be forthcoming in connection with share ownership only if the shares are tied to some kind of company finance which has a positive beneficial effect on the economy as a whole, as well as having its undoubted social and political virtues? Perhaps the Economic Secretary, in response to the feeling of the House, might bear that in mind, because, in fact, he must have, as the House must have, regard not only to the desirability of share ownership for social and political reasons but also to the desirability of keeping the economy in balance at home and competitive abroad.
With these reservations, I have no hesitation in supporting most warmly the Motion. I have tried to look at this from a strictly economic point of


view and to avoid what I think, in the jargon, are called value judgments. I hope that approach has some merit, but, for all that, it is a subject in which I think value judgments have a supreme importance.
I suspect that those who oppose the spirit of my hon. Friend's Motion are motivated primarily by value judgments and by social and political considerations. I admit that share ownership is very bad for the class war and I agree that share ownership is very inconvenient for those who advocate Socialist planned chaos. Indeed, the arguments against share ownership and the attitude of those who put them forward are what principally commend the conception to me. In a more positive sense, I congratulate most warmly my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) on his Motion and the way in which he moved it. I believe, with him, that personal ownership of private property is one of the first elements of freedom and that in the complex organisation of modern industrial society the preservation of the virtues deriving from the ownership of private property is a problem of profound importance and very considerable difficulty.
I believe that this problem lies at the heart of my hon. Friend's Motion, and I support him in his endeavours in his promising and well-conceived effort to solve it.

3.30 p.m.

Mr. J. Grimond: I apologise to hon. Members who have sat here longer and more continuously than I have. I assure them, however, that I shall speak for only three minutes—though they will, of course, be Parliamentary minutes, which are always twice as long as normal minutes.
I think that the hon. Member for Ilford, North (Mr. Iremonger) gave a slightly false impression in his speech, although I imagine that he did not mean to do so. I think that there was a danger of gaining the impression, from what he said, that the wider spread of share ownership would not have the desirable effect on the economy which many of us think that it would have.
As regards what the hon. Member said about the desirability of companies raising their new capital direct from the public, one factor which has not helped has been the Capital Issues Committee and the fact that, until quite recently, the Government definitely discouraged them from doing so. Secondly, it is true to say that, if people are to be asked to invest in a number of companies just coming on the market, they would have to have considerably more information and there would have to be a different climate of information and opinion throughout the country.
Generally speaking, I think that it would be difficult to ask people to invest in anything like reasonable terms in companies which were comparatively unknown, unless, of course, it were done through a unit trust. Here I suggest that the trust movement, not only the unit trusts but the managed trusts, has an advantage in the spread of its investments which it should exploit. The trusts should go more outside the "blue chip" range on which they are at present concentrating.

Mr. Iremonger: I was not referring necessarily to new companies raising their finance direct. Not only new companies would need finance. Old companies and "blue chip" companies, instead of financing themselves, might well obtain their money direct in that way.

Mr. Grimond: I think that they will increasingly do so if they are allowed to.
I believe that it would have a very healthy effect on the economy if the ownership of shares were more widely spread. It would act as a check on inflation in two ways. Many people feel that the wider spread of share ownership would benefit only the shareholders. I do not accept this. I believe that we all have an interest in the health of our economy. Further, I believe that the ownership of shares acts as an incentive, though a small one, perhaps, to people not only to take an interest in their own business, if they own shares in it, but in the working of the whole economy and to understand it. For instance, it would lead to better appreciation of the point that to put up wages without increasing production does no good. It would encourage the expansion of production.
If people have an interest in profits in general, it should be realised, profits being technically, of course, not a cost, that it is possible to reward people much more directly for extra production in particular firms instead of simply raising wages throughout an industry as a whole. This is a large subject and, of course, I do not in the least suggest that we should not have high wages. I certainly think that we should, but I have in mind ways of rewarding people for extra productivity in particular businesses.
In all seriousness, I hope that the Government will take note of what has been said about the need to look critically at some aspects of our taxation system. The hon. Member for Taunton (Mr. du Cann) gave a very impressive list of things which could quite simply be done. We from these benches have tried to press constructive proposals, not simply for publicity reasons but because we believe that they are sound.
While I fully appreciate that wider share ownership is not the beginning or end of good industrial relations—they rest on all sorts of other factors—and I understand well that the Government themselves cannot do everything, I believe, nevertheless, that it would be a great advantage if the Government could clear away the tax disadvantages which now exist not only for the direct effect which such a move would have, but to give a signal to the country generally that they are aware of the tremendous significance of the whole movement to which reference has been made today and of the part it can play in giving us a much healthier economy.

3.34 p.m.

Dr. Alan Glyn: In following the Leader of the Liberal Party, the hon. Member for Orkney and Shetland (Mr. Grimond), I am pleased to be able to agree absolutely with his statement that the wider ownership of industrial shares can lead only to a healthier economy. I do not really believe that there is a very great difference between the ownership of real property and the ownership of industrial shares. In a similar way, both give the holder a stake in his country.
I was very impressed by what my hon. Friend the Economic Secretary said about the supply of money. He pointed

out that, in the last century, a great deal of the money came from rather different sources and it is for us now to find a replacement. Most of the capital in the last century, that which financed the railways of South America, for instance, and projects in Spain and throughout Europe, was found by the very large capitalists.
These capitalists do not exist today. To some extent they are replaced by the trade unions, the banks and the Church, but we also have to consider another important sector of the community, which so far has been completely ignored—that which reckons its wages in pounds a week rather in hundreds or thousands of pounds a year. In that range there is a vast source of wealth which we could use for a great expansion of our economy. Not only that: as my hon. Friend the Member for Halifax (Mr. Maurice Macmillan) has said, it could be used for the development of and investment in the Common Market and the Commonwealth, and much further afield.
The ownership of industrial shares falls into two entirely distinct categories. First, there is the general ownership of shares throughout industry and, secondly, the ownership of shares in the industry in which the person works. They form two entirely different spheres, because in many cases the method of purchase is entirely different. In the first case we have a much more complicated method of share purchasing. With a firm such as Tate and Lyle the procedure has been simplified, as it has in the case of Imperial Chemical Industries. They have their own organisations, Which simplifies the purchase of shares.
To the ordinary general public, however, the purchase of shares in industry is much more difficult. The difficulty arises to a large extent out of ignorance and also because of the very complicated procedure which is necessary at the moment for the purchase of shares. Like hon. Members on both sides of the House, I would like to see that method simplified, possibly by the issue of bearer shares or shares of no par value and the removal or reduction of the Stamp Duty. There are many other methods, which have been referred to by other hon. Members.
I appreciate that many difficulties are involved in simplifying the procedure, and that there are certain dangers. If we allowed everybody to have bearer shares there would be a danger of workers coming from their factories easily being tempted to dispose of their shares, and there is also the danger of fraud. But there is a case for a simplification of the general means of exchange and purchase of shares in ordinary companies.
As for co-partnership, it is quite simple for firms to assist their workers in the purchase of shares, as is done in the case of Tate and Lyle and I.C.I., but there is a little difficulty in the case of smaller firms, as has been mentioned by some hon. Members. The security is not so good. A small firm is more subject to pressure and economic influence, and it may go bankrupt. The worker is more loath to put his capital into that firm. There is a way of overcoming this difficulty. Several firms could combine to form a syndicate, so that the shares in the group could be divided and the load spread.
The hon. Member for Coventry, North (Mr. Edelman) mentioned the control of companies. I believe that the trouble lies with the shareholders. They do not bother to attend the meetings, or take any interest in the affairs and conduct of their companies. If the shareholders consisted of workers in the industry I am convinced that a much greater interest would be shown. They would begin to talk not of what "the company" was doing but what "my company" was doing. They would talk about "what my company did at the last board meeting" and would ask, "Why does not my company expand and buy new equipment?" That is the attitude that we want to encourage.
Much greater publicity is needed. The average person knows little about the share structure of a company, or the purchase of shares. We have a long way to go in educating people to understand the complex structure of a company, where the profits go, and the machinery by which the company works. There is a great deal of misunderstanding about the difference between profits and wages. If a worker was a shareholder he would be able to understand these matters more easily. He would receive the balance

sheets of his company, and his company reports, and would know exactly what was happening.
Banks could co-operate to a greater extent—and they are beginning to do so—in enabling small accounts to be opened and small denominations of shares to be purchased. I do not subscribe to the theory that we should have share shops, as we may have betting shops. There must be some sort of control physically over the transfer of shares to avoid the very real possibility of fraud.
There is a tendency for workers to treat their shares, when they are given them as bonuses, as just another cash bonus. In this respect, the scheme introduced by I.C.I. is a great protection. An employee cannot actually own his shares until they amount to £40, by which stage he begins to realise that they have value. The parcelling out of shares in small amounts tends to make the recipient feel that they are some sort of bonus which he should cash out at the earliest possible opportunity.
If we were to develop this idea, we could make the workers into a genuine partnership so that there was no longer a big gap between management and workers, whereby both sides regarded the company as a corporate body and its interests would be a dual interest, not only of the workers but also of the management. Management and workers could be welded together in a partnership which made everybody a capitalist. Many of the misunderstandings which exist in industry could simply be removed.
I was sorry to hear my hon. Friend the Economic Secretary say that one of the difficulties was that a great deal of money had to be channelled for the national effort. There is room not only for the national effort, which is put out through the Government, but also for individual shareholders. The individual ownership of shares is a thing of the future, but it is for us to encourage it now while we have the beginnings of an expanding economy.
There are great dangers when the prices of shares fall but, as my hon. Friend the Member for Wokingham (Mr. van Straubenzee) said, in some respects that has a benefit because it makes people realise that their holding in the


company is dependent not only upon the amount of work they do, but on the general economic structure of the country and the world. It gives them a stake in the company and it makes them realise that their efforts not only help to enlarge their company, but bring profit to themselves.
If we can get that sort of partnership between management and shareholders, I am sure that as a great nation we can compete not only with the Common Market, but with the rest of the world. As many hon. Members, on both sides, have said, we have the possibility of welding together for once and for all workers and management into a solid block, so that we can go forward as one corporate body to attack and, I believe, conquer the markets not only of Europe, but of the world.

3.43 p.m.

Mr. Reader Harris: I add my congratulations to those of many other Members to my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) for having the good sense to choose this subject when he was fortunate enough to win his place in the Ballot. There is one aspect on which I should like to dwell before we close the debate. Naturally, I support everything that my hon. Friend the Member for Clapham (Dr. A. Glyn) has said, particularly about simplifying the methods of buying shares. At the moment, it might almost be said that not one worker in ten ever realises that he could become a shareholder or that if he did become a shareholder there are solid benefits to be derived.
I also endorse what my hon. Friend the Member for Clapham said about the good work that is being done by the Press. The City editors of the big daily national newspapers are doing a magnificent job in the way they write up the events of the City and how they write about British industry. They seem to me to be writing in a way which is forceful, intelligent and attractive. It is good to see in most of our national dailies that the goings-on in the City are given almost as much prominence as is given to the despatches of the racing correspondents.
The aspect to which I should like the House to direct its attention is whether,

in this mid-twentieth century, the limited liability company is still the right, best and most up-to-date vehicle for private enterprise. The limited liability company has been in existence now for a great many years, and no doubt it is doing a useful job and a good job, but it is many years since it was invented, and although I know that there have been adjustments as a result of various Companies Acts, there are, undoubtedly, very great disadvantages.
One disadvantage has been referred to already more than once by hon. Members, and that is the enormous gap which there is between the shareholders in a company and the workers in a company. Undoubtedly, throughout the great mass of the British working class there is the gravest suspicion of shareholders. This is a bad thing. One need not go into the reasons why this has come about, and one need not seek to apportion blame. The fact is that the workers generally distrust the shareholders, and the shareholders, it must be said, by and large, do not give a damn for the workers because they do not know who they are; they are all so widely separated from one another, and there is a complete lack of confidence. I have a suspicion that if one starts to make an appeal to the workers to start buying ordinary shares in limited liability companies a great many of the workers who do will be regarded by their fellow workers as blacklegs who are going over to the other side.
Somehow there has got to be rebuilt some degree of confidence between the workers and the shareholders. Often, of course, boards of directors of companies do not help. Often there is a very great gap between the directors and the workers, and sometimes there is a gap between the directors and the shareholders. Are these defects of human nature, or are they defects of organisation, of the law of the limited liability company? At 14 minutes to 4 o'clock on a Friday afternoon I do not propose to answer all those questions. There are many people much wiser about them than I am, and perhaps there are other people who can do so.
I should like, however, to draw attention to this point, and to ask the Econo-


mic Secretary if at any time the Government do intend to look into the whole structure of the limited liability company, because it is the vehicle of private enterprise and it has got to work. Let there be no mistake about it. It has got to work, and it has got to be popular, and it has got to reach the stage where everybody in this country believes in it, because if the people of this country do not believe in it there will be nothing but disaster for the whole Western hemisphere.
The hon. Member for Paddington, North (Mr. Parkin) was drawing attention to what has happened in the other half of the world, in the Communist half of the world. The Communist system is entirely different from ours. It does not have limited liability companies. If the worker, the individual, is to have a share of what is produced in a Communist State he has got to take it on trust that he is getting a share.
The great advantage of the Communist system is that out of any man's work all of the profit goes to the State. Under the limited liability company system the profits of a man's work go partly to the man who does the work and they go partly to the people who put up the money, and so wealth is spread all over the country, and I think that is why in the Western nations which work under the private enterprise system there is generally at present more personal prosperity.
Haw much longer will this continue? I underline this fact. In a Communist State the State takes the whole of the profit of every man's work. Under the limited liability company system the profit is spread over the whole of the country; everybody to a certain extent benefits. This system has got to work.
However, as has been pointed out more than once, the Communist system is beginning to show dividends, and it will increasingly do so. In China, for instance, I do not think it could be doubted, there are millions of workers who are now better off than they were before. Now we are faced with new, emergent nations, Ghana, Nigeria, Central Africa, and they are going to look at the two systems, the private enterprise system, the capitalist system, call

it what we like, and they are going to look at the Communist system, and if the private enterprise system does not work, and if it is not even popular with the people it is supposed to benefit and who are supposed to be operating it, what chance has capitalism of survival?
I do not want to cast any gloom over our present system and say that it is not working. I merely ask whether it is the best system it could be. I am impressed by the fact that in America there is a far greater faith in the private enterprise system than there is in this country. I believe that the trade unions there have a greater faith in it than those in this country, and I think that the British trade unions have to make up their minds whether they believe in the system or not. It is all very well to talk about the Government taking the lead in this matter of buying shares in companies, but what about the trade unions doing so? Do the trade unions believe that their own members should own shares in companies? Do they believe in private enterprise? Are they completely wedded to 100 per cent. nationalisation? I feel that the trade unions ought to make their position clear, and I do not believe that they are necessarily wedded to 100 per cent. nationalisation. If they are not, and if they believe in private enterprise, the trade unions must do something about it.
It is customary to make appeals to the Government, and I am sure that the Government have a great responsibility. I hope that they will give the lead which my hon. Friend the Member for Twickenham and the rest of the House would like to see. I hope they will also bring it to the notice of the trade unions, perhaps through the medium of the National Joint Advisory Council, to see if they cannot encourage the workers to acquire a greater stake in the industries which bring us so much prosperity.

Question put and agreed to.

Resolved,
That this House, believing that economic stability, political freedom, and social justice require a wider spread in the personal ownership of the industrial wealth of the country, calls upon Her Majesty's Government to consider whether any action can be taken to remove obstacles which may deter the small saver from investing in industry and to encourage him to make such investments.

TEACHING ABOUT THE COMMONWEALTH

3.52 p.m.

Mr. A. P. Costain: I beg to move,
That this House, realising that the beneficial influence of this nation in world affairs depends on a united Commonwealth, urges Her Majesty's Government to stimulate by every possible means, including teaching in schools and colleges, a widespread knowledge in the United Kingdom of the dependent and independent countries of the Commonwealth and of its political, economic and cultural development.
Because of the diversity of climate, creed and culture in the Commonwealth, it is almost an insult to this Motion to try to explain in the eight minutes which remain to me, but I should like to make one or two points.
Those right hon. and hon. Members who have been to the Commonwealth, and those who have relatives there who come over here, all realise how appalled people are at the ignorance in this country of Commonwealth affairs. There was a Gallup poll quite recently—not that I believe very much in Gallup polls, but they do give some indication of what people think—and I understand that as a result it was found that only half of the people who were questioned could name a single member of the British Commonwealth. Of the remainder, 2 per cent. thought that the United States was a member of the British Commonwealth.
Of course, ignorance has decreased a good deal because of the interchanges during the war and compulsory military service after the war, and because of improved communications, and discussions in this House. The Press is also doing its best, but I fear that it is more on the sensational than the educational side. Some educational progress is, however, being made. Business houses have set up schools for educating their own staffs. The educational conference which my right hon. Friend the Minister of Education attended quite recently produced a scheme, and particular attention should be drawn to the circular which my right hon. Friend sent out in May, 1959, drawing the attention of the schools in this country to the necessity for getting to know the Commonwealth better.
Obviously, in the time that is available, it is not possible for the Minister to reply to me today, but I should like to make one or two points as one who has spent a great deal of time in the British Commonwealth. I do not think that the great distances in the Commonwealth are fully appreciated in this country, or that we appreciate the vast areas of Africa or the fact that the Sahara Desert separates Africa just as the Panama Canal separates North and South America. I do not think that it is appreciated, for instance, that the cool areas and the highlands of Northern Rhodesia are places where Europeans want to live because of the cold nights in winter, while the natives do not want to live there because of those cold nights, unless there is European housing available and there are European-based industries there to attract them.
Too often the sensational is given too much priority. Any tragic news is generally exaggerated, because the Press has to rely on sensation. Africa is so diversified that almost anything that the Press says about it is true. We cannot deny that women are murdered in the streets in this country. The Press makes a sensation of the news, but we have so much knowledge of matters in our own country that that news is seen in its proper perspective. One of my main aims in moving this Motion is to try, through the House, to get that point across to the public. I fear that the enemies of democracy are using these half-truths and the freedom of the Press to work their own ends. Too often the sentational is given too much priority.
I do not think that the scale on which developments take place in areas to which we hope to bring democracy is generally realised. I remember seeing, many years ago, the film "A Yank at the Court of King Arthur". It made an amusing picture because it contrasted the modern-day American with King Arthur's court, but modern travel has made that kind of contrast a reality. The education provided in this country should be such as to enable people to realise that. A great deal more should be done in the schools. We should not make a party matter of a serious subject like this, but the Conservative Party has two documents on the subject and I have already referred to the appeal made


by my right hon. Friend the Minister of Education. Generally, however, education possibilities and the curricula depend on the local authorities. I wonder whether sufficient use is made of visual aid in this type of education and whether sufficient information is obtained from the representatives in this country of these Commonwealth Territories.
The British Empire was built by men who had a desire for adventure and an unquenchable thirst for knowledge. The British Empire has now become the British Commonwealth, and the Commonwealth is going through an adolescent stage. It is during the stage of adolescence that here is the greatest need for knowledge. This is true of human beings. All of us who have children know how essential it is to understand them during adolescence. The British Commonwealth in this adolescent stage is a human problem. Its whole structure depends on human understanding, and it is so that we may secure that human understanding that I urge the importance of providing this type of education.
I hope that from the very few minutes of this debate some realisation of this may go out to the country and that we may be able to say to our cousins overseas that we are trying to understand their problems and that we want to be with them. A united British Commonwealth has much to add to the peace, prosperity and moral leadership of the world—

Orders of the Day — ROAD TRAFFIC (DRIVING OF MOTOR CYCLES) BILL

(changed from "Road Traffic (Driving
of Motor Cycles and Mopeds) Bill")

As amended (in the Standing Committee), considered; read the Third time and passed.

Orders of the Day — ADOPTION ACT, 1958 (AMENDMENT) BILL

Read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Parker.]

Committee upon Friday next.

Orders of the Day — HOUSE OF COMMONS MEMBERS' FUND BILL

Read a Second time.

Bill committed to a Committee of the whole House.—[Mr. J. Griffiths.]

Committee upon Monday next.

Orders of the Day — MR. H. R. SANDFORD (COURT-MARTIAL)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooman-White.]

4.5 p.m.

Mr. A. E. Cooper: It is a very sorry tale that I wish to unfold to the House. To quote one eminent counsel, "There was a wretched air of conspiracy throughout". A number of Members of this House have tried to secure justice for Mr. H. R. Sandford, and many distinguished lawyers have satisfied themselves that a grave miscarriage of justice has occurred. For the convenience of the House, they include the names of such lawyers as Mr. Walter Frampton, Mr. M. Healey, Mr. Eustace Fulton, Mr. Norman Parkes, Colonel S. T. Banning, Mr. D. N. O'Sullivan, Mr. D. N. Pritt, and Mr. Mark Smith.
Before the House can be appraised of all the facts, it is necessary to go back into the history of this case. In 1934, the Government of India did not provide motor cars for officers of the Royal Engineers employed in the Military Engineering Service on the supervision of roads and buildings, but in cases where it was essential for the efficient performance of his duties, an officer who was so employed by the Government of India was advanced money on interest for the purchase of a car. The amount advanced, together with interest, was recoverable by monthly instalments from the officer's pay, the first instalment being payable in the month following the payment of the advance.
The next point is very important and germane to this case. In the case of an advance drawn in India, it was necessary for the officer to execute a mortgage bond and forward the dealer's receipt, with the bond, to the Controller of Military Accounts, whereas in the case of an advance drawn in England the


officer executed a personal bond and no dealer's receipt was required. In this case, the bond was drawn in England and the demand by the Controller of Military Accounts for a receipt was an illegal act. Evidence of this was given at the trial by Mr. Batuk Singh, and the Controller of Military Accounts had no authority to demand the receipt from Mr. Sandford, because he had drawn the advance in London. I shall quote in a moment the evidence of Mr. Batuk Singh in this connection.
On his arrival in India, Mr. Sandford, after returning from England on leave, proceeded in his new station. When arriving in India he ordered a new car from Mr. Youett, a partner in the firm of British Motor Services, and was loaned a car by that firm pending the delivery of his new car. Mr. Sandford had continually owned a car for the efficient performance of his duties while employed in the Military Engineering Service since the year 1914. The suggestion by the prosecutor and the Judge Advocate, therefore, that he had not ordered a car from Mr. Youett's firm, was, on the face of it, absurd.
Why did not Mr. Sandford take delivery of the car immediately? When he returned to India he had only been at his station for a few weeks when he was posted for a three months course to the senior officers' school at Belgaum, some 1,500 miles away. He was not authorised by Army regulations to take a car with him, and one was not necessary for the performance of his duties while at the officers' school. He therefore postponed taking delivery until his return on completion of the course, when the next year's models would be obtainable.
Shortly before Mr. Sandford was posted to Belgaum the Controller of Military Accounts requested him to forward a dealer's receipt for the purchase of the car, although, as I have previously said, since Mr. Sandford had not executed a mortgage bond he was not authorised to demand a receipt. Nevertheless, Mr. Sandford complied with the request of the Controller of Military Accounts.
Mr. Batuk Singh, who was the Deputy-Controller of Military Accounts, in his evidence at the trial—page 14 of the proceedings—said:

Before an officer is paid through my Department it is the usual procedure to get a receipt in advance from him. A receipt is often in our possession days before the officer gets his pay. In actual fact such a receipt is not exactly true until he gets his pay. Therefore a receipt given in advance is not false because the money has not actually been paid at the time the receipt is given.
Mr. Sandford had no idea whatsoever that the signature on the receipt given to him was fictitious, and not one iota of evidence to the contrary was produced at the trial. It is incredible that anyone should believe that he would knowingly have accepted a receipt with a fictitious signature thereon when he could have obtained a genuine advance receipt from the company.
During the trial, evidence came to the knowledge of the prosecution, evidence vital to the case of the defence. This was the evidence of Major Kerr, which was deliberately suppressed by the prosecution. It was unjust and Mr. Sandford was therefore gravely prejudiced in his defence. The prosecutor was well aware that Major Kerr had identified the writing of the name "Williams" on the receipt as being the handwriting of Mr. Youett, as at the time of identification the receipt was in the custody of the military authorities and the prosecutor was the staff officer who both acted on behalf of the G.O.C.in-C. Western Command during the preliminary investigations and was the officer who took the summary of evidence prior to the trial.
In October, 1933, Major-General Matheson requested Brigadier Kemp-Welch, Commandant of the Senior Officers School, Belgaum, to obtain Mr. Sandford's explanation for submitting the advance payment receipt. Brigadier Kemp-Welch was at that time Mr. Sandford's commanding officer and he accepted the explanation given and replied to General Matheson accordingly.
On receipt of that communication, however, the latter, realising that as Mr. Sandford's commanding officer had condoned his action no further proceedings could be taken against him under military law, refused to accept the explanation and immediately caused a criminal case to be instituted in the civil court at Quetta against him. That, however, was not disclosed to Mr. Sandford, who was ordered to be placed under military arrest at Army headquarters at the request of General


Matheson. It was not until his arrival in Quetta, two days prior to the commencement of the trial, that Mr. O'Sullivan, Mr. Sandford's counsel, discovered the true facts.
At the trial, Mr. Sandford's counsel submitted to the court that the trial should be adjourned until the case against Mr. Youett had been concluded in the civil court, but that request was refused. It is, perhaps, not without significance that when finally in the New Year the case against Mr. Youett was proceeded with in the civil court, he was acquitted. It is submitted that Mr. Sandford was as gravely prejudiced in his defence as Mr. Youett was unwilling to give evidence while a case was pending against him in the civil courts.
Why is it that so many eminent counsel who have seen all the papers—and I emphasise the phrase, "all the papers"—in this case and who have had an opportunity of discussing the matter with and cross-questioning Mr. Sandford are all convinced of Mr. Sandford's innocence and that only successive judge advocate generals are out of step? Before proceeding, I point out that the legal opinions of the Judge Advocate General's Department over the years have been suspect and have been twice upset.
With regard to procedure, the composition of the court, for example; the first part of Rule of Procedure 21 (b) provides that the members of a court-martial for the trial of an officer shall be of equal if not superior rank to that officer. But, with a degree of circumlocution which would be the envy of a roundabout, the Judge Advocate-General persuaded the Secretary of State that the court need not be so composed as Rule of Procedure No. 21 (b) provided. This was subsequently overruled by the Lewis Committee. At the trial, on the advice of his counsel on the grounds that he had no case whatever to answer, Mr. Sandford did not give evidence.
The reason why the Judge Advocate-General's advice to successive Secretaries of State has been against Mr. Sandford quite simply is that the record of proceedings held in the Judge Advocate's office is not the original but a tampered with version of it. In 1937, Mr. Duff Cooper said to the late Sir William Allen:

… nor am I able to say that it is the original copy."—[OFFICIAL REPORT. 16th March, 1937; Vol. 321, c. 2014.]
There are innumerable answers from Secretaries of State on this subject, both in the House and in writing, to the effect that the record of proceedings held in the Judge Advocate-General's Department is not the original record but an altered version of it.
With the time at my disposal, I cannot give too many examples of this. I am bound to say, however, that the statement prepared by Mr. Sandford's lawyers on the alterations and omissions covers nine foolscap pages. The three examples which I propose to give are as follows. The first concerns the sworn affidavit of Mr. Dennis Neil O'Sullivan, barrister-at-law, who was Mr. Sandford's counsel at the court-martial. I shall read only the relevant parts. He stated:
(2) That I have been a member of the Indian Legislative Assembly and a member of the Legislative Assembly of the Province of Sind. I have also held Judicial Office, having acted as a Judge of the Court of the Judicial Commissioner of Sind. (3) I am at present officiating as Public Prosecutor for the Province of Sind. … (5) That the record of proceedings was taken down in Court by the Judge Advocate in his own handwriting. (6) That to the best of my recollection on the first day of the trial after the adjournment for lunch I inspected the record and found that the proceedings had not been correctly recorded by the Judge Advocate. (7) I accordingly, to the best of my recollection, protested to the President of the Court. I subsequently handed to the Court a written submission, a copy of which is attached herewith marked A. (8) That on subsequent occasions I found that additions and alterations had been made to the record out of court; that is when the court was not sitting. (9) That on or about 19th January, 1934, I handed to the Judge Advocate a further written submission, copy of which is attached herewith and marked B. (10) That the Record submitted to the Confirming Officer was not the Record of the Court Martial Proceedings as made in Court.
The fact is that annexes A and B which were submitted to the court are not in the documents held by the Judge Advocate-General at this time. They have been deliberately suppressed by the Judge Advocate.
The second example, the most serious of all, relates to the evidence of Mr. Batuk Singh. During cross-examination, counsel asked Mr. Batuk Singh this question:
You cannot say therefore that the accused owes 39,000 rupees?


The witness replied:
I cannot say.
The record of the proceedings has been altered to say:
I can say that the accused, therefore, owes at least 39,000 rupees.
This is in direct opposition to the statement made by Mr. Batak Singh in the cross-examination.
From the purely technical point of view, the third may be considered to be even more grave. After the promulgation of the sentence has taken place in Quetta on 5th March, 1934, the record of the proceedings remained in Quetta for more than five weeks when they should have been in the War Office in London; and after the date of the promulgation they were tampered with to the extent that two documents were withdrawn and two more submitted in their place. The person who did this was not very clever because the documents were dated 12th April, 1934, some five or six weeks after promulgation of the sentence.
We shall no doubt hear from the Parliamentary Secretary that this case has been reviewed over and over again and in answer to Questions in this House, I have been referred to the Oliver Committee, to the High Court and to the Court of Appeal. In my submission, the reference to the Oliver Committee is a deliberate attempt by the War Office to create in the public mind the idea that this case has been properly reviewed.
What was the Oliver Committee set up to do? It was simply to look into the question of the procedure at courts-martial and to see whether any improvement in the arrangements could be made. On 3rd June, 1938, the War Office wrote to Mr. Sandford:
I am directed to enquire whether you desire to place your views before the Committee on any matter which falls within their terms of reference which are:—'To examine the existing system of trial by court-martial under the Army and Air Force Acts and matters incidental thereto, and in particular to consider whether it is desirable and practicable that a person convicted by court-martial should have the right to appeal to a civil judicial tribunal against his conviction, and to make recommendations.' If you so desire, the Committee will be glad, in the first place, if you would forward to me a memorandum embodying your views …
In the last paragraph the letter goes on:
While the Committee will consider any particular case as illustrating some suggestion

for the improvement of the existing system of trial by Court-martial they have no power, as a court of appeal, to review the merits of any decision in any particular case. Any memorandum which you may send or any oral evidence you may give will not be made public.
In his letter to me on 15th March the Secretary of State said—I was asking for a review, a public tribunal—
…in effect this is what happened in 1938 when Sir Roland Oliver held his enquiry into alleged miscarriages of justice at courts-martial. He made a very through study of the proceedings in the Sandford case and Mr. Sandford gave evidence to him.
What was the evidence Mr. Sandford gave? He was asked one question and only one question, not by Sir Roland Oliver but by Mr. Tristram Beresford. The question he was asked was, "Is it your opinion that when the court is reaching its verdict the Judge Advocate should not he present?" to which Mr. Sandford replied, "That is my opinion." It is perhaps not insignificant that one member of the Oliver Committee was Sir Felix Cassel, a previous Judge Advocate-General, who himself previously reviewed Mr. Sandford's case.
Having been dismissed the Service with all that that means, upon appeal to the War Office four of the charges are quashed and Mr. Sandford is awarded a pension by the War Office amounting to half his retired pay. Subsequently, it was pointed out to the War Office that this might be regarded as a mitigation of sentence. Once the possibility of that was known at the War Office immediately the payment of his pension was transferred to the Colonial Office where it became a compassionate allowance, and there it remains to this day.
Finally, after his conviction a memorandum from Headquarters Western Command India was sent to Sandford stating that Army Headquarters India were prepared to arrange a free passage for him to go to any British Colony but not to England. Mr. Sandford proceeded to England by air at his own expense and when he arrived in England he asked for repayment of the money. Although it was alleged that financial embarrassment was the cause of his troubles in India, he was refused repayment of the money on the ground that he had adequate funds at his disposal.
I could read the sworn testimony of Mr. Dennis O'Sullivan, which is a dreadful indictment of this case. Sufficient to say that he said:
That case has caused me to change my opinion and has left a bad taste in my mouth. The utter ineptitude displayed and the subterfuge resorted to, I shall never forget. There was a wretched air of conspiracy shrouding the whole proceedings, and all through I felt that the members of the court felt that it was as much as their promotions were worth to let off Sandford".
The conduct of General Matheson and the Judge Advocate throughout this sordid trial were reprehensible in the extreme.
I regret that I have given my hon. Friend the Under-Secretary of State for War so little time in which to reply. I had so much that I wanted to say. But I must beg of him in the interests of everybody, the good name of his own Department and of the Judge Advocate-General's Department, and certainly for the honour of Colonel Sandford, to set up a public inquiry to settle the matter once and for all.

4.27 p.m.

The Under-Secretary of State for War (Mr. Hugh Fraser): My hon. Friend the Member for Ilford, South (Mr. Cooper) has left me little time in which to reply. He has already circulated to many Members a series of documents relating to this case. I have, however, only a few minutes left in which to deal with it.
First, may I turn to the question of Mr. Justice Oliver's Committee. The hon. Member has said that only one question was asked of Colonel Sandford. I must point out that I have here a typescript record, and in at least 11 pages of it Mr. Sandford was asked a variety of questions. As far as the Oliver Committee was concerned, the Chairman personally studied the whole of the proceedings and was satisfied, as were the Committee, that in not one of the cases disclosed—one was the case of Mr. Sandford—was there any miscarriage of justice.
Let me run over the events leading to the court-martial of Mr. Sandford in 1934. In October, 1932, Sandford went on eight months leave from India to the United Kingdom. He had previously signed an application form for an advance of 3,000 rupees to enable him to

purchase, while on leave, a motor car which he would use for duty purposes on his return to India. Sandford drew the money, but he did not purchase a motor car either in this country or in India. On his return to India he failed to supply the required documents to the Controller of Military Accounts, but when requested to do so, a few months later, he sent documents purporting to show how he had disposed of the loan of 3,000 rupees, and he sent what purported to be a dealer's receipt for a Ford motor car.
The signature "L. Williams" on the receipt was not that of any person engaged in the motor trade in Quetta. It was common ground that it was a false signature. It was also common ground that although this receipt expressed to be an acknowledgement of the sum of 3,000 rupees in full and final satisfaction for a Ford touring car, no sum whatever had been paid.
As a result of this Sandford was tried by general court-martial in January, 1934, and convicted on five charges and sentenced to be dismissed His Majesty's Service. On review, the Army Council set aside four of the convictions against Sandford on the technical point that certain documents relating to the purported but non-existent car purchase were misrepresentations and not forgeries. But the remaining conviction of uttering a forged document, which was the dealer's receipt, was sustained as was the sentence of dismissal from the Service.
The essence of Sandford's offence was that he borrowed money from official sources for a specific purpose which he did not fulfil, but purported to show that he had done so by uttering a forged receipt. He was found guilty of uttering a forged document contrary to the Forgery Act and was dismissed the Service. He was, of course, guilty of conduct which made him unworthy of trust and the Army could not properly have kept him in their service holding the King's Commission. What was at issue was not only a question of law, but also a question of honour relating to his conduct as an officer of field rank, holding a particularly responsible position. Those are the basic facts.
I believe that today and over the past years neither my hon. Friend nor the other paladins of Mr. Sandford in this


House have really challenged the correctness of the decision as to the facts. What they have challenged again and again, and always unsuccessfully, are the technical legal grounds as to the processes of justice at Sandford's court-martial and trial in India.
The main points which my hon. Friend has tried to put forward this afternoon, and the essence of his pleading, are that the trial, the court and its procedure, including such points as the record of proceedings, were incorrect, irregular and misdirected. I have been through these points at considerable length. I would merely say that, having gone through them, I am convinced that the points which my hon. Friend has attempted to raise about the Judge Advocate in this trial are incorrect.
There were, as my hon. Friend knows, at this trial no shorthand notes. It was a question of the notes being taken by the Judge Advocate, and those notes being available to all and being circulated. At the time of the trial, the summary of evidence which was circulated was not questioned. It was only about four years later that this attack was made.
This matter has been through the hands of a great variety of Secretaries of State: Lord Hailsham, in 1934, who later was Lord Chancellor: Lord Halifax, in 1935; Mr. Duff Cooper, in 1935, 1936 and 1937; Mr. Hore-Belisha, in 1937, 1938 and 1939; the right hon. Member for Easing-ton (Mr. Shinwell), in 1948; the right hon. Member for Carshalton (Mr. Head), in 1953. All have considered this case. In addition, every possible means of appeal by Mr. Sandford has been exhausted—appeals in this country to the Sovereign, to the Court of Appeal and to the Divisional Court. I am certain that

excellent legal brains have gone through all the points raised in the memorandum circulated by my hon. Friend and the various points raised by Mr. Sandford's attorneys through this last quarter of a century.
None of these numerous and distinguished reviewing bodies has reached, nor can I reach, any other conclusion than that this officer was rightly convicted in law and that the Army was right to dismiss him. There is not the slightest shadow of doubt that Mr. Sandford was rightly convicted and rightly punished. To agree, as my hon. Friend suggests, to a public inquiry would be to undermine the rule of law and to make a mockery of the whole system of checks and safeguards on which our legal system is based.
I have given this case great study. I myself have been through scores of documents. Over twenty-five years files have accumulated in the War Office, full of what I believe to be tedious repetition. Today, not a single new point has been raised. Every one of the points raised by my hon. Friend has been looked at by Judge Advocate-Generals, by Secretaries of State and, finally, by me and by people today who, previously, had no knowledge of this case in the War Office.
Only one conclusion can be reached—that this officer, after he had attempted to defraud, was a man in whom His Majesty and the Army could no longer place sufficient trust and that, rightly, he was dismissed from His Majesty's Service.

Question put and agreed to.

Adjourned accordingly at twenty-five minutes to Five o'clock.